In terms of features the Denon has, of course, many advantages. The O2-ODAC is a very simplistic, no frills, device with minimal connectivity.
For typical headphone use it is more than enough and it does have the power to drive demanding headphones.
The Denon is seriously under-specified for headphones, if the 50mW for 32 ohms is the accurate power output of the unit.
To put things into perspective your Dac Magic XS is specified at 150mW, which is 3 times more, and the O2 amp delivers 613mW into 32 ohms.
Ehhh...that is pretty low output. I'd stay away from it, too.
I think you'd be very happy with the ODAC/O2. I used to have the O2 separate with the ODAC and now run an Asgard 2 with the ODAC. I like the bigger volume knob and I needed the pre-amp speaker output of the Asgard 2, but the Asgard 2 is bigger and puts out a lot of heat. In terms of SQ, I wouldn't describe the Asgard 2 as a significant improvement.