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DAC stands for digital to analogue converter. audio today is stored in digital format (zeros and ones) and needs to be converted to an analogue signal before it can be sent through amplification, or to speakers.
you can find some type of DAC in anything that deals with digital audio today. like a PS3, computer, TV, cellphone. keep in mind there's your cheap DAC, good DAC, and awesome sauce DAC just like how amps are.
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