Does that mean it's only used when the player is connected to an external amp?
Well, you wouldn't be able to use that to drive transducers otherwise, but "amp" here includes the internal headphone amplifier. Simplified Sequence of usual circuits digital to analogue circuits is basically,
Transport/PC > DAC > Analogue output stage > amplifier > speaker or amp
You might be gettign confused by the use of the term "amplifier" in multiple contexts. Take it to mean its root word, "
amplify," instead of strictly just the amplifier. The output stage - whether HDAM or more conventional Op-
Amps -
amplifies the analogue signal produced by the
Digital to
Analogue
Converter into a 2v-ish output to go into a compatible input (they each have an impedance rating but set that aside for now) on an
amplifier that takes that 2v signal, applies a preamp where necessary, and then the
amp stage is what basically makes that into a signal measured more in watts for driving speakers (or fractions thereof for headphones).
I wouldn't use good or bad, it's just how the circuit works. HDAMs, conventional Op-Amps, discrete ICs, and tubes all have their advantages and disadvantages; the best circuits don't really stray from a true signal regardless of what they use. The thing is, in some cases it may be easier to achieve that using one more than the others, in terms of cost, physical size, heat, etc.
IF anything, such analogue output stages will inevitably still color the sound, which is why some manufacturers choose tubes to add that "tube sound" or some sell different HDAM modules to tweak the sound of their DACs. Newer direct digital circuits in which the DAC using a digital volume control (not the same as a digitally
controlled analogue potentiometer) feeds the analogue signal straight into a power amplifier section, the whole circuit itself designed to work without any type of analogue output stage nor analogue potentiometers. It won't be as modular, as when some systems can have an outdated digital to analogue conversion system can be replaced and still use the same separate amplifier, but of course that comes with the territory where no advantage comes without some other kind of disadvantage (whether each trade off is worth it is generally up to the system's owner, after all, they'll be the ones using it).
