its a line out so it is used as a dac.
From amazon page.
[size=small]The FiiO L7 is designed to be used with the E7 USB DAC/AMP, providing a dedicated line-out jack for sending a high quality line-level signal to other devices such as a stereo or amplifier.[/size][size=small][/size]
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[size=small]The L7 further expands the versatility and flexibility of the E7 USB DAC/AMP, allowing more usage scenarios, such as using the E7 as a dedicated DAC device. The L7 also has a built-in USB jack, allowing the E7 to be charged and used at the same time.[/size]
[size=small]Stick it in the bottom, then plug the USB into your pc, then into the USB side of the L7, and then from the 3.5 jack to your O2. That's how I do it with my arrow. Also if you use it as a DAC on a PC make sure to go to sound preferences and change the output to 96k, since the E07k is able to support this rate.[/size]
[size=x-small]Also, the description says E7 but I use the L7 with an E07k and it works fine. Just make sure to turn on LO bypass. It's a tiny switch so I used a 0.7mm mechanical pencil to switch it. [/size]