An AC coupled input attempts to remove any constant DC voltage going through it. This is useful if have an audio signal (such as the output of an oscillator) which is AC in nature, and you want to remove any accidental DC offset that might have crept into it. These offsets can cause one half of the AC waveform to clip prematurely, or can cause clicks at the start and end of envelopes or mutes. However, this coupling can mildly distort a wave going through it, as in essence AC coupling is a high pass filter that is attempting to remove very low frequency components.
Similar:
capacitor coupled
