The difference between the headroom and the noise floor is the dynamic window, the useful range of signal levels. (In sales literature this range is called the signal to noise ratio.) The dynamic window concept is useful when you consider a signal that goes through several devices:
Dynamics of the recording chain
These dynamic windows are typical of high quality equipment. Although there is room for improvement almost everywhere, the dynamic limits of the living room (neighbor's complaints minus the noise of the refrigerator) are the most constraining.
The proper use of any device involves getting a match between its own dynamic window and that of the previous device. On the diagram you will notice a mismatch between the console and tape deck. The console will overload before the deck, stealing 5 dB of dynamics. This could probably be avoided by an adjustment of the tape deck input control. Note that most of the capabilities of the cd player are wasted in this system.
The ratio between the loudest and softest sounds you wind up getting with a system like this is the DYNAMIC RANGE. What is the dynamic range of the example, and where might it be improved?