This statement by itself is useless, because most of people don't understand how digital to analog conversions works. I'll try to explain the difference in another language.
Filter
Many people are confused by what does "filter" means, when we speak about DACs. There are many different steps in D/A process that are called filter.
Consider the signal, incoming to a filter, as a sum of a valuable signal, and a noise, or garbage. The filter is supposed to remove garbage and to pass through the valuable signal. An ideal filter removes 100% of garbage and passes through 100% of valuable signal, but it does not exist. A real filter passes through a part of garbage, and removes some of the valuable signal.
From this point of view, any DAC at whole
is a filter, where the valuable signal is the original analog signal, and the garbage is that what makes it digital. But different stages in D/A conversion are filters as well.
PCM vs DSD512
Conversion from PCM to DSD is a filter as well. The higher output bitrate, the better the filter.
Oversampling of PCM in a delta-sigma DAC is a filter which produces DSD-like output.
To make analog signal from DSD, one more filter is required, but much simpler than the filter required to convert directly from PCM. In a DAC, this final filter is one and the same for both DSD and oversampled PCM.
As
@Whitigir correctly stated in the first post, most of the DACs make DSD256-like bitstream from any incoming PCM at the first stage. So, now it should be obvious, that making DSD512 may sound better, because it has passed a better filter before going into the DAC.
The conclusion: PCM, being converted to DSD512, contains less garbage and more from the original analog sound, than the same PCM, oversampled in a DAC.