Individuals use usb because it has best SQ vs other inputs/outputs available to them. I've observed many trying coax, AES/EBU, I2S inputs on dac, finding them inferior and returning to usb. Theoreticals are one thing, hearing is another. USB continues to be used because both manufacturers and consumers find it preferable to other formats.
As for software vs hardware, I've heard great variability with both.
My take is optimized streaming only achieved when all components, software, software and hardware configurations are optimized. Everything matters. Based on reports of others I observe great correlation between optimized streaming setups and great sound quality. The most experienced streamers report their findings, others follow their recommendations and experience better sound quality in vast majority of cases.

