<< Yes, we've established that. But that doesn't tell me specifically when it works. >>
It will be used when any CD audio stream is used and if you have it enabled in your sound card properties. As long as its enabled and you are playing back a CD audio stream, it happens.
<< What does that mean? What's 'the port'? >>
This "port" is a 2 wire cable that is additional to the cd audio cable that comes with CDroms, etc. The standard CD audio cable has 3-4 wires and one is labeled red. The digital cable is only two wires, typically labeled with red and black.
<< Will someone please answer my question. Specifically, the difference in data extraction / conversion via digital audio cable vs. no cable. Again, is DAE implemented during (1x) audio CD playback? And does any soundcard specifically output the original digital signal without any D/A -> A/D conversion? >>
From what I've read and used, DAE is another method to extract audio from CD using a digital stream versus using your sound card as the additional extractor. It is supposed to be a cleaner extraction of audio compared to the default of CDROM-Sound card->WAV file. In this method, its purely CDROM->WAV file. The output of the CD audio will vary depending on your speaker setup, so you could have an analog speaker setup and use DAE to play/rip, or you can have a digital playback method using an analog method to play/rip. I would imagine if you used DAE to play back audio and had a digital speaker setup, there wouldn't be a need to do D/A-> A/D -> D/A.
vash