You are correct, the DAC chip doesn't up-sample PCM to DSD.Check out the part i quoted, that you wrote. There is no way the AK4493S chip is upsampling PCM to DSD.
I don't need to read an article because I have read the AKM datasheet itself.
Please re-read what I originally wrote:
I'm up-converting all my FLACs to DSD 256 with Foobar's DSD Processor.
The second article I linked describes this process.