Found this article this morning and thought it was interesting. I am not too excited about the prospects of special headphones just for iPhone. But the idea of having lossless stereo 48 kHz digital is promising. Not sure if connecting a DAC to the iPhone will work but I am hoping.
It probably just a fancy way of saying Apple is allowing headphone to have an integrated DAC and ADC (with MFi and powered by the Lightning port) that will work with the Lightning port directly. As for lossless 48kHz music via Lightning - that is already in the market for a few years now, so no fuss there.