I'd have to track down the exact post by Rob Watts, but everything in the Hugo and Mojo gets up-sampled up to 2048x and DSD gets converted to PCM. The reason DSD is popular is that the filters in many DACs are the default ones that come with the DA converter chip which are fairly poor. if you've heard regular CD-quality material through a Chord product (or a Schiit multi-bit DAC, or some of the classic high-end R2R DACs) instruments sound wonderful and natural. So it's not hard to feel that the problem is one that needs a high-resolution or DSD-based solution, but that the hype has been going in the wrong direction. There are some high-end DACs that use their own filters via a DSP or FPGA with generic ES, Wolfson, CS or AK chips which are nicer-sounding, the processing of DSD results in a smoother, less "digital" sound which a lot of people like, as I understand it because it doesn't have to be processed, most of the time, through the relatively poor filters in most DACs. Then again we have the same thing with non-oversampling DACs, which many people are fans of for the same reasons. But NOS DACs and DSD have their own issues, the latter being of the huge space they take up and the arguably false benefits of using it in the first place. So the purpose of Rob's design is to overcome the original limitations of PCM without having to resort to using any special digital formats or taking up huge amounts of storage.
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