WAV to Foobar, USB Out and Win 7 Volume Control??

I have been using USB out from Lenovo laptops for many years now and generally with satisfactory results.

Recently, I was puzzled as I tried to get sound from the computer using WAV files, Foobar and my usual digital out to my Antelope Zodiac DAC - everything was silent so I started with a reboot of the DAC.

In the end, the DAC had not lost its handshake, however. Rather I had accidentally muted the volume in Windows?

Then, I noticed I could change the volume up or down in Windows as well as on the Foobar app as well as on the DAC.

This was not intuitive to me, as I would have thought a digital out signal would be fixed?

Can anyone explain how this works? Or is there a better way to set things up for best fidelity?

Thank you,