If you use air play doesn’t that make it lossless by default? Optical out has max cd quality. No clue why they chose to do that and it seems kind of foolish cause no one wants to use their internal dac
If you have to convert from 24bit source to 16bit digital output in the device, some noise is generated along the way due to "improper conversion" as Amir puts it, not a simple loss of resolution by going down in bit depth (which I don't care much).
What I was wondering is specifically if you feed it 16bit signal, does it produce the same digital output bit for bit.