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There are three types of bitrate options that you can specify for each the encoder (although some encoders may not allow any options).

1) Constant Bitrate (CBR)

This is the default encoding mode, and also the most basic. In this mode, the bitrate will be the same throughout the whole file. So, a second of audio from one part of the file takes just as much disk space as a second from any other part of that file - regardless of whether either part is silence, acoustically simple, or quite complex. This means that you are likely to hear distortion more in the complex parts than in the simple parts. The advantage of CBR formats is that even older players understand them, and that you can reliably predict the file size from the duration of the sound (or vice versa).

2) Average Bitrate (ABR)

In this mode, you tell the encoder to aim for an average bitrate that you specify, skimping on the simpler parts of the music, and using higher bitrates for the parts of your music that are more complex. The result will be of higher quality than you'd get in a CBR encoded file of the same size. This mode is highly recommended over CBR. This encoding mode is similar to VBR.

3) Variable bitrate (VBR)

In this mode, you say what level of quality you want in the output file, and the encoder compresses each second as best it can to get just that level of quality - using less information to represent simpler parts of the song, and more information to represent the more complex parts. However, this mode relies heavily on the encoder's model of how you perceive quality, and could lead to a few "bad choices" in the encoding process. If possible, you may want to specify a minimum bitrate (e.g. 64 Kbps) to avoid those potential errors.