What are advantages of a DAC with descrete components vs lets say a miniature DAC powered by USB with ICs mostly?  The dedicated DACs have it's own Toroid, and a rather large power section, why is that?  Does it provide much cleaner sound than USB?  

In most cases, a well designed headphone amp or dac using ICs and op amps should measure and perform better than one based primarily on discrete components. As for the benefits of the discrete designs? They are larger, more complicated to design, more power hungry, and as such, appeal to audiophiles and companies can charge outrageous prices for them.

cjl said:

  In most cases, a well designed headphone amp or dac using ICs and op amps should measure and perform better than one based primarily on discrete components. As for the benefits of the discrete designs? They are larger, more complicated to design, more power hungry, and as such, appeal to audiophiles and companies can charge outrageous prices for them.

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You forgot the horrors of massive quantities of global negative feedback!
 
The benefit of discrete design is that it is easier to probe with an oscilloscope!
 
Okay, sarcasm aside. Discrete design allows audio engineers to custom build their circuits for specific applications rather than throwing in a general purpose part. They get all the fun of creating their own design. If I were to DIY an amp, I would build it with discrete components. It's much more fun to tinker with. Op amps are "too easy"!
 
And yes, as cjl said, audiophile appeal is much higher for discrete design than it is for an OPA1662
 
Cheers