When does someone need a DAC

Yes. A CD player player does have its own internal DAC. It has to, otherwise it wouldn't be able to play the CD. I think a good place to start would be listing what kind of equipment you currently have. If you already have a high end CD player, its very likely you won't need to do anything.

Well, for one thing, you can then use a computer as a "transport" and play digital files.

When it walks like a DAC and quacks like a DAC