Comment 14 for bug 63544

To be more specific:

PCM controls program output... The best way I can think to describe it is what "Wave" would be in Windows. It does not control everything, but likely everything that your programs output. If, for instance, you are using MIDI, it will not have an impact if the MIDI has its own control. Microphones, Line-In, etc. all have their own controls and will not be controlled by PCM volume.

Master relates to speaker output only. Headphones relates to the headphone output only. Master is a bit misleading and it took me a while to figure it out. I personally think this is a great setup because it allows for more control over things.

However, what you CAN do if you would like to have better control over your sound is in System->Preferences->Sound. Highlight Master, hold down CTRL and click on Headphone and have the buttons control BOTH of those which will give you true control over the sound levels you want.

I was actually having the same problem until I stumbled upon this thread. The info here was able to help me achieve my ultimate goal and I figured I'd share the info. The reason PCM doesn't suffice for me is because if I I plug my bass into my line-in for instance, the volume keys would have no impact on it. Actually, I have my desktop chained into my laptop for sound. My line-in always has my desktop connected to it. Even if I lower or mute PCM, the desktop will come through loud and clear unless I do something to my Mic or Line-In [don't remember which is which.] Anyway I hope this helps.