Bitstream? Or Jittery, Polluted, Kernel Stream?

Sorry for the technically ignorant question here, but while struggling to unravel the puzzle of simple, clean PC audio, I purchased a Hagerman technology interface box.

This connects to the USB out of my Windows laptop, and then offers me a SPDIF out so I connect to an Audio Research DAC 5.

It seems to work as described and everything sounds OK, but I was a little curious to discover that the volume control still worked on the Windows media player.

I thought I was just getting 1's and 0's into my Audio Research DAC? Can you adjust the volume on a bitstream?

Or is something else going on here?

Thank you,
Yes digital data streams can be mathematically manipulated to adjust volume levels.
If you can control the volume using windows volume control, then I recommend bypassing the windows kmixer. See other threads on this or shoot me an email. Bypassing kmixer will improve your sound. Give your dac an untainted bitstream and let do its magic.