Where it works best. So many assumptions which may be wrong. Here goes:
Volume Control in DAC.
Pros
- No danger of overloading amp or preamp.
- Potential for volume control via USB or SW volume control.
Cons
- Noise. The preamp and possibly the DAC and PA/HPA can contribute to the noise.
Volume Control in preamp.
Pros
- Better i.e. lower, noise floor at medium to low volume levels
Cons
- DAC may overdrive preamp. Preamps often have a gain stage between the input and the Volume Control. Older preamps may be too sensitive and subject to clipping.
Volume Control in PA/HPA
Pros
- Lowest noise floor.
Cons
- Again, DAC may overdrive preamp.
See how confusing it is! Personally if the output of the DAC and the input of the PA/HPA are reasonably matched I prefer ditching the preamp and having the Volume Control in the DAC with a direct connection to the amp.