DAC : an explanation
Anything that converts a digital signal to an analogue one is a DAC. A telephone, for instance, is one; an analogue mic records your voice, it converts it to a digital file which is sent down the telephone wires. In the case of hi-fi, a DAC turns your digital audio file into the analogue signal your speaker outputs. The better – read: more expensive – your DAC, the warmer, richer and “more human” the sound that comes out of it.