Dont believe that is correct- its just the digital output from the phone to the DAC, needs the digital to analog conversion in the dongle - but in exclusive mode, only UAPP music will play, in non exclusive system sounds, notifications etc also. Its "sharing" the DAC with other system resources.
Though I must admit, I didnt think UAPP functioned at all if it didnt have exclusive access.
EDIT- there is a difference in how Android/ UAPP/Dongle operates. If you grant UAPP control of the DAC, its exclusive to UAPP, Spotify and other apps etc wont play through the DAC. If you instead reject the "handle" prompt on connecting the DAC, then open UAPP it requests "access" . In doing that, both UAPP and Spotify and others will all be able to use the DAC during the same session. I cant comment on whether one method sounds better than another.
EDIT Pt2- UAPP/ Android behaves differently with different DACs! For my Meizu dongle it requests to "handle" the DAC first- if I reject that, then open UAPP it requests "access". On my E1DA it seems to only ever request "access". If I deny access, UAPP shows the playback as "Direct" as opposed to "USB DAC" but still plays through the dongle anyway. Presumably after doing its usual android resampling to 48khz trick.
And for the TEmpotec Sonata HD Pro- if I grant "access" to UAPP, Spotify etc cant play through it in the same session. What a mess!