An ipod contains a memory to store the music files, a DAC to convert the digital files to analogue and an amp to boost that analogue signal.
If you plug headphones into the headphone jack, or use a dock into the docking port you use all three parts of the ipod to get your signal. Volume control is with the ipod and any amp it is connected to.
If you connect to an ipod with a LOD you bypass the ipods amp only. That way you can do all the amplification and volume control with whatever amp you connect the ipod to. That can be a mini portable amp or hifi amp. Even Apple staff admit that is better than the ipods own amp.
If you connect the ipod by its docking port to a digital dock such as the Wadia itransport or Onkyo NDs1 then it bypasses the ipods amp and DAC and uses it as a memory only to store music files. Both of those docks then need to be connected to a DAC and the DAC to an amp.
Got it. I am about to assemble a semi-portable setup. I was thinking that since the Wadia is able to bypass the iPod's DAC, then there may be a connector available to plug in to the iPod that would expose purely digital output. Then I could use that as input to whatever. In the portable world though, as pointed out by ClieOS, it is not as simple as taking that output and sending it into an amp that also has a DAC, such as the 3Move. That being the case, I think I'm going to end up with the Cowon D2+ for the source, and either the P-51 Mustang or iBasso D4. (I just returned my 1 week old Triple-Fi 10 Pro's - I just cannot tolerate IEM's. )