MiniDisc (MD) technology provides compact portable high-quality recording and playback by using a combination of Magneto-optical disc technology and adaptive psycho-acoustic encoding to reduce the amount of digital storage required by about 5 times compared to audio CDs.
The discs come in two forms, read-only prerecorded, or read-write discs using a layer of a special compound of cobalt, iron and terbium. This magnetic material both exhibits a low Curie temperature and affects polarized light according to its magnetic orientation.
Nothing currently compares for high quality pocket-sized recording ability, but I suspect this will change fairly soon as low-power mp3 encoder devices and IBM's new tiny hard discs "Microdrives" start to appear. "mp3" (Mpeg2 audio layer 3) is an even more efficient audio compression scheme than the Sony ATRAC used in MiniDisc devices.
Some handy links about MD technology:
MY Sharp MD701 minidisc recorder/player.