Dense wavelength division multiplexing (DWDM) refers originally to optical signals multiplexed within the 1550 nm band so as to leverage the capabilities (and cost) of erbium doped fiber amplifiers (EDFAs), which are effective for wavelengths between approximately 1525–1565 nm (C band), or 1570–1610 nm (L band).
EDFAs were originally developed to replace SONET/SDH optical-electrical-optical (OEO) regenerators, which they have made practically obsolete. EDFAs can amplify any optical signal in their operating range, regardless of the modulated bit rate. In terms of multi-wavelength signals, so long as the EDFA has enough pump energy available to it, it can amplify as many optical signals as can be multiplexed into its amplification band (though signal densities are limited by choice of modulation format).
EDFAs therefore allow a single-channel optical link to be upgraded in bit rate by replacing only equipment at the ends of the link, while retaining the existing EDFA or series of EDFAs through a long haul route. Furthermore, single-wavelength links using EDFAs can similarly be upgraded to WDM links at reasonable cost. The EDFA’s cost is thus leveraged across as many channels as can be multiplexed into the 1550 nm band.