In theory it's always best to keep the digital side of things at full resolution - which means not reducing the bit depth. In practice, while that's technically always true, it makes a lot more difference in some situations than others. For example, the digital volume control in the Sabre DACs has extra resolution which it can use to avoid rounding errors which often occur with "simple" digital volume controls. This allows the internal digital volume control to work over a certain range without seriously degrading the audio quality. However, with digital volume controls that lack that feature, the sound quality will degrade as you reduce the level.
The "trick" is that how that affects you will depend on your other equipment. For example, if your digital volume is set to maximum level at normal listening levels, then you won't notice the loss of quality when you turn it down very much - because, since you're lowering the audio level at the same time as you're lowering the resolution of the signal, the loss of resolution will be less audible. However, if your digital volume control is at 10% when you're at a normal listening level because the analog amp you have it connected to has a lot of gain, then it will probably sound noticeably degraded, and will get noticeably worse as you lower the level even further.
But yes, optimally, it is always BEST to use a digitally controlled analog volume control if you have one available - and leave the digital control at 100%.