The Digital Negative format lets you convert your proprietary-format raw files (NEF, CR2, etc.) into a format that’s fully publicly documented (more future-proof). Now the standard has been extended to support 32-bit floating point data (capable of representing hundreds of f-stops of dynamic range), plus optional lossy compression (JPEG-like sizes with the flexibility of raw), and more. Check out the DNG 1.4 specification notes on the Lightroom Journal for more info.
I assume that the specification assume that the pixel alignment was done beforehand.