Since our hearing range is said to be 20Hz to 20,000Hz. So, how can we possibly hear something at 44.1Khz? Or do we hear only half of the sound produced at 44.1Khz by any audio CDs? What is going on?
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The 44.1kHz it's the sampling frequency, i.e. the frequency at wich the encoder samples the audio data. It has nothing to do to the frequency of the audio data.
You can generate a 1000Hz sine wave, sample it at 44kHz and play it back: what you hear is still the 1000Hz sound. Take a look here.
Actually there is a reason to why CD audio data is sampled at 44kHz, that is slightly more than double the maximum frequency humans can hear.
It's because of the Nyquist-Shannon sampling theorem which states that:
In layman terms, just sample at double the maximum frequency of the audio to get an "accurate" reproduction of the original signal.
Good answer Mr Shunz.
The Wikipedia article you included has this passage:
For an explanation of Intermodulation Distortion (IMD), see http://en.wikipedia.org/wiki/Intermodulation#Intermodulation_in_audio_applications
In the top-right figure there, the signal at the lowest frequency could fall in the hearable range (< 20 kHz). This peak could be lost in an ADC-process (analogue to digital conversion) if the sampling rate is too low. That is one of the reason hard-core audio-enthusiasts cherish all-analogue audio; from the recording studio, via the LP and to the speakers.