Billy, or Lord Nerd, if one prefers that form of address,
dBFS refers to a digital signal of maximum amplitude. So for a 16 bit signal stream, the pk-pk amplitude would be represented by 216-1, or for an 8 bit signal stream, the pk-pk amplitude would be 28-1.
In the case of GQRX the dBFS shown are, AFAIK, in relation to the received signal being processed, just before demodulation. Other software may indicate dBFS in terms of the signal coming from SDR hardware, before further processing.
I hope that explains both what the absolute maximum is, and its reference point. Note that GQRX, of itself, establishes no absolute signal level in terms of receiver input signal. Given the flexibility of source hardware, everything from 8 bit RTL dongles to 12, 14, 16, and most recently 18 bit A/D convertor-equipped front ends, with all sorts of filtering of greater and lesser merit, that is not surprising.
As for how this stuff works, it's a little hard to offer guidance without knowing how much you know already. It's not helped because a great deal of what's available about SDR on the Internet omits a sensible overview of the processing chain architecture. For instance, the Wikipedia article says a great deal about the history of SDR, but little to nothing about the art of SDR & DSP (https://en.wikipedia.org/wiki/Software-defined_radio).
HTH,
Robin, G8DQX
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