DWDM works by combining and transmitting multiple signals simultaneously at different wavelengths on the same fiber. In effect, one fiber is transformed into multiple virtual fibers. So, if you were to multiplex eight OC -48 signals into one fiber, you would increase the carrying capacity of that fiber from 2.5 Gb/s to 20 Gb/s. Currently, because of DWDM, single fibers have been able to transmit data at speeds up to 400Gb/s.
A key advantage to DWDM is that it's protocol- and bit-rate-independent. DWDM-based networks can transmit data in IP, ATM, SONET /SDH, and Ethernet, and handle bit rates between 100 Mb/s and 2.5 Gb/s. Therefore, DWDM-based networks can carry different types of traffic at different speeds over an optical channel.
From a QoS standpoint, DWDM-based networks create a lower cost way to quickly respond to customers' bandwidth demands and protocol changes.