DACs within components


Please let me know if I have this correct.When using the digital output on a DVD player,the DACs in the receiver or processor are being used and not the DACs in the DVD player.When using the analog outputs on the DVD player,the DVD DACs are being used and the DACs in the receiver or processor are not being used. How does an external 2 channel DAC get connected between a CD or DVD player? Does it have 1 digital input and a L R analog output?
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