DAC chip only understands two kind of languages, either PCM (just about every DAC) or DSD (most of the higher end one). While DSD music is usually stored in its native format, PCM music is usually compressed into other more space-saving formats like MP3 or FLAC. So what the music apps do is to decode (decompress) those formats back to their native PCM format and sending the data to the DAC chip in the language it understands. What Neutron does is no difference from any other apps, except the decoder it used is higher in quality than what built into the Android system. But the story doesn't end there - as Android is originally built with very limited hardware capability, Google decided to use a pretty basic resampler audio driver to force all audio output to 16/44.1 (in order to make their job easier) and that process can degrades SQ noticeably. So early days Android doesn't have great SQ because of both poor decoder as well as the resampler. These days however, many manufacturer replace the decoder as well as the resampler with their own, higher quality counterparts, and therefore we have observed better SQ on Android overall. That's why Neutron tends to have more noticeable effect on older gears but not as much on newer gears, as many newer gears already have optimization in place and the decoder they used are good enough that Neutron doesn't show much advantage over. That being said, what Neutron doesn't do is the actual D-A conversion - that's the job for the DAC chip. Neutron does the pre-processing of the digital music into what the DAC can understand in order for the DAC chip to do the actual D-A conversion.
So one thing you might notice is that Neutron doesn't bypass or replace the resampler. It won't be a problem if the resampler itself is good in quality, but it can affect the SQ if it isn't. That is where native USB DAC support comes in - apps like USB Audio Player Pro, Onkyo HR Player or HibuMusic have their own USB DAC driver built in that allows direct communication between the apps and the DAC, skipping the resampler out and thus eliminating a potential problem of SQ degradation. Neutron actually has this function built-in as well, but it is very buggy and usually only works well with lower end, more basic DAC chips.
Many music apps like old poweramp doesn't actually have its decoder at all. They rely totally on what the Android system supplies. Then you have something like poweramp alpha that trying to do what Neutron has been doing by using their own internal decoder. But to really get the best out of the USB DAC, you really need an app that has native USB DAC driver support.
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