A DAC (Digital to Analogue Converter) does exactly what the name suggests; turns the digital bits from a digital source material (hard drive/CD/other medium) and converts that information into an analogue electronic signal that our speakers/headphones can use to produce sound.The chain is: DAC (Digital to Analogue Converter) does exactly what the name suggests; turns the digital bits from a digital source material (hard drive/CD/other medium) and converts that information into an analogue electronic signal that our speakers/headphones can use to produce sound. The chain is: