Just to oversimplify, DAC stands for "digital to analog converter". We don't listen to bits and bytes or a series of 0 and 1 (digital). We listen to a continuous waveform (analog).
The information on a cd is digital, and the DAC converts it to analog. As stated above, cd players have built-in DACs. If you go from the cd players digital out to an outboard DAC, you bypass the cd player's DACs and you can alter the sound of the translation from analog to digital. Like other equipment, each DAC has its own sound (although many differences are subtle IMHO).
A computer soundcard is also a DAC, for example, because it converts digital to analog.
The information on a cd is digital, and the DAC converts it to analog. As stated above, cd players have built-in DACs. If you go from the cd players digital out to an outboard DAC, you bypass the cd player's DACs and you can alter the sound of the translation from analog to digital. Like other equipment, each DAC has its own sound (although many differences are subtle IMHO).
A computer soundcard is also a DAC, for example, because it converts digital to analog.