WDM is a multiplexing technology used for fibre. It acts like a prism, separating the light in the fibre into different coloured beams - or different wavelength channels - each of which carries as much data as a single fibre which has not had WDM applied to it.
There are two types of WDM, namely:
Coarse WDM (CWDM) - here the wavelengths are spaced well apart which means lower cost optical transmitters and receivers can be used but the number of wavelengths is relatively small.
Dense WDM (DWDM) - allows for a much larger number of closely spaced wavelengths but requires more costly transmitters and receivers.
