[lxgr]

All iPods except for the very first and second one have supported AAC out of the box, and I believe there was a firmware update even for the two that didn't. Apple didn't invent the format, but was definitely its biggest proponent from early on.

[sandreas]

Although the format might be superior in many ways, it has not replaced mp3 as the default format, because you can make mp3 sound pretty good and the space savings are not that important on modern devices.

Interestingly the iPod Nano 6th generation I think was the first device to support fast-forward and rewind via headphone remote. That's the main reason I don't use my 512GB iFlash iPod classic 2009 mod as often as I want to, although the support for m4b (m4a+aac) audio books is pretty good.

I've not tested ALAC on older iPods, which is a proprietary lossless format, but it might work on the newer more powerful ones (iPod touch)