In the same way that after connecting an external DAC to your PC, you can still use Windows volume control to raise/lower the volume. It is just multiplying all the PCM data points by a gain factor. When the bits are put back together into a sine wave, the amplitude of the wave is greater, thus the volume is louder.
I can confirm that in my setup, the data received by the Marantz is PCM.
From what you are saying, does it imply that my android is sending processed data (data * gain) to the marantz dac ?
If it is so, if my android (or any other usb audio source) is not a good processor. Like if the data * gain is not properly calculated or the gain differs along the entire data stream (for any reasons may be). This will affect the overall quality of the music... right ?
And i do not get the idea of using a sine wave to represent the digital signal (which only contains 1's and 0's). A square wave must be a better representation for this data... right ?