Passive attenuator have high output impedance that can alter the sound, even in powered monitors (with rather high input impedance for their integrated amp).
Digital attenuation done right (that is, with dithering and that still provide the typical dynamic range) is preferable to passive attenuator, whatever its cost (at a matched/reasonable price, of course). With 35bits words, the M51 is very well suited for this!
On a side note: I remember a video where M. Mallinson (a senior engineer who developed the SABRE 9018 chip) said that digital attenuation was worse than analog one. That's pretty funny because:
1- The ES9018 achieves excellent figures which make it suited for digital attenuation more than any other DAC chip, short of the M51 that don't rely on a typical DAC for D/A conversion.
2- I can't imagine the price of the preamp featuring a volume control that bests what they can achieve with the ES9018! So, yes in theory, analog is preferable since it can achieve lower distortion, but in real world, how expansive would it cost to make something with better figures than the ES9018? Probably much much more than the price of the M51...
Well, you can build a passive attenuator with 10k Pot. Like I said - done right, don't slap a random 50k pot on a chain with high output source and low input amp. Also, FYI, the higher the input impedance of the amp, the better it is for passive attenuator. I'm using a 10k passive pre, which isn't altering the sound nor reduce bass/dynamic like people usually claimed (granted mine are an ideal circumstances where I got ~600 ohm source and 100k input impedance). The only downsize is that I need short cables, which means I'm practically bathing in the heat of 4x 6550 tubes to control volume - not a pleasant feeling - hence why I'm ditching it for an active pre.
There's countless of debates on this topic. No matter the wordings, most of the "digital attenuation" is still reducing resolution. Especially in the case of the NAD, which IS a typical delta-sigma DAC with upsampling - rebadged in fancy advertising words. The ESS9018 has its own upsampling mechanism too. Now Steve claimed his Overdrive dac does no such thing, and is digital attenuation perfection, I can't check that claim since I don't have 5k to blow =p.
To be honest though, companies can say all they want about how digital attenuation is supposedly superior. But the reality is once you introduce a (good) active preamp into the chain, dynamic and resolution increases significantly.
That's what people mean by digital is worse than analog volume. Digital got potential to be much better than analog, but no one seems to "unearth" that potential yet - much like the other digital vs analog stuff (film vs DSLR, digital vs vinyl)