most of your garage bands these days use digital recorders to capture their music. Typically the mic feed (which is analog) goes into an interface box where the A/D conversion takes place. Check out the professional musician sites and you'll find TONS of alternative A/D converters for this purpose. The quality of the microphone, the quality of the A/D converter and the sampling rate have a lot to do with the ultimate quality of the sound upon playback.
In a home stereo system, you may never need to convert to digital if you play analog sources such as vinyl LP's, reel-to-reel tape or FM radio (non HD). But if you want to put all your music on a computer, you'll need to convert those analog signals to digital somewhere. Hence the need for an A/D converter.
If all you do is playback, you probably don't need one.