" The use of a DAC is confusing."
A CD player has 2 main parts; the transport and the DAC. You put the CD into the tray and the laser reads the info off the disk. Thats a transport. The digital signal is then sent to the dac (digital to analog converter). The dac's job is to convert the signal from digital to analog. You can't listen to music while its digital (its just a bunch of 1's and 0's). Once its analog, the signal gets sent to the preamp just like any other component (tape player, reel to reel, radio, etc), and you listen to it.
Instead of having a dac built in as part of a CD player, you can also buy them as stand alone components. Currently, the main reason you buy a stand alone dac, is so you can plug a computer into it. This allows you to use a computer as a source for playing music.
That's just the basics as to what a dac does, but like everything in audio, there are differences. Price, parts quality, design theory, .... and the list goes on.
" Probably a dumb question but can a regular CD player be plugged into a Line Stage preamp without a DAC."
Yes. But remember, you must have a dac in order to listen to any kind of digital source. In this case, you would use the dac inside the CD player. A line stage is a preamp that doesn't have a phono input. You can only plug line level sources into it. In reality, every type of component other than a turntable is a line level source. For phono, if you don't have it as an input on your preamp, you use an external phono stage. The phono stage itself is a line level component.
Here's a link to a very useful resource. Its a journal that's broken up into several issues. I can't think of any other reference that comes close to matching it. They also review several ARC components. I believe the VT-100's in it. Just start with issue one.
http://vandersteen.com/audio-perfectionist-journal