Originally Posted by Kal Rubinson
As hedged, it is true. Many players do volume attenuation in the digital domain and actually reduce resolution as they throw away data. This is not good.
This ignores the fact that as a practical matter, volume attenuation in the analog domain also reduces resolution because it reduces the signal and makes its amplitude that much closer to the noise floor.
On balance, the noise floor in a digital system can be made as low as is desired by increasing the data word length. In the analog domain, you are pretty well stuck with the resolution limits imposed by the laws of physics.
OTOH, there are more sophisticated digital attenuators as well as analog attenuators in some devices that are just fine.
Often the worst resolution losses in real world systems happen after the digital signal is converted back to analog.