There exist electrical-magnetical distortions and crosstalk induced by the gear and there is also distortions and acoustic crosstalk induced by the speakers/ room / two ears relation...
I will explain soon the psycho-acoustic geography of my room in my acoustic thread... 😁😊
"When is it optimal to stop improving the system?" -- is this: *when no more content is added or improved significantly.*
The answer to the question when stop upgrading is related also to acoustic treatment and control...And your own purse for sure...But price tag of the gear is overevaluated much in S.Q. experience and acoustic and psycho-acoustic underevaluated much... Then...
I was hearing new details about sound and more accuracy after acoustic devices tuning or speakers/room tuning...
There is also the acoustic cues and factors that cannot be given by the gear alone in an optimal way and ask for room treatment and control...
Especially listener envelopment/source width ratio and timbre....
This was my motto for years: dont upgrade before the audio system is well embedded in mechanical and electrical and acoustical working dimensions...
I myself for example add a linear power supply for my dac with success and a lower noise level but the linear supply itself must be controlled for his vibrations for example...I even add a "golden plate" on it (shungite+copper tape)...