[shadesbass]

Originally Posted by sweetspot

For a more technical explanation, if Shadesbass is around here at some point, he'd be THE man to give the dissertation ! Though I'm sure that there will be more than a few people chiming in here in a while..g

Thanks for the big build-up!
I think most of it has been covered, at least from a playback point-of-view, but I'll try and explain the complete picture...

Originally Posted by SlowRunner

Would anyone be kind enough to provide an idiot's guide to explain the following:

a) what the optical line in/out is/does
b) why is it so highly sought after?
c) how is it utilised?
d) what to do with it in a recording context?

Thanks!

a) - c): We can think of an mp3 player as being constructed from several basic sections:

| Storage | -> | DAC | -> | Amplifier | (-> | Headphones |)

Storage consists of a hard drive or flash memory, where the music is stored in digital format.
The DAC (Digital to Analogue Converter) converts this digital data into an analogue signal, before it gets amplified to drive a pair of headphones.

Most mp3 players only have an output after the amplifier, but the H1xx players also feature a line-output (taken before the amp but after the DAC) and an optical (Mini-Toslink) output (taken before the DAC).

Most DACs and amplifiers in mp3 players are relatively low quality to keep production costs at a minimum, and this is acceptable for most people, as they use small inexpensive earbuds to listen to their music. However, when higher quality headphones are used, the shortcomings in the DAC and amplifier are revealed, and they become a bottleneck in the signal quality.

The optical output therefore provides a way of retrieving the music whilst it's still in digital format. This allows the user to connect an external DAC (and headphone amp) to their mp3 player, thus bypassing the lower-quality internal DAC and amp.
The external DAC must have an optical (Toslink or Mini-Toslink) input in order to connect to the H1xx. (A lot of portable DACs nowadays only feature USB connections for use with laptops.)

d) The optical input works in much the same way, but in the reverse direction. A digital signal is received through the optical input and stored directly to the storage medium (hard drive in this case). Receiving an equivalent analogue signal would mean having to convert it to digital format using an ADC (Analogue to Digital Converter) before storing it. So again, using the optical input bypasses a conversion process, which can degrade the signal quality*.
*This is a little more complex, as it is dependant on the sampling rate of the ADC and is out of the scope of this explanation.

Some CD/DVD players, computers and MiniDisc players have optical outputs which can be connected directly to the H1xx, but a majority of stereo digital signals are transmitted by copper coaxial cable terminated in RCA phono connectors.
Fortunately both optical and coax formats use the same protocol (S/PDIF), meaning they can easily be converted from one to the other, thereby greatly increasing the number of products that can be connected to the H1xx.
This also means that an external DAC with a coaxial digital input could be used with the optical output, provided an optical->coax converter is used.

As a final note, converting from optical to coax or vice-versa does mean adding a conversion process into the signal chain, which is what we've been trying to avoid above. However, digital<->digital conversion losses are tiny (although not necessarily negligible - again out of the scope of this discussion) when compared with the potential losses incurred in the digital<->analogue conversion process.

Originally Posted by caligula

If I got an Ibasso D1 would I simply need to connect the optical out of the ihp120 to the optical in of the ibasso and then connect my headphones, or would I then need to connect another amp to the ibasso?

The D1 has in integrated headphone amplifier, so you can connect your headphones directly to it.
However, it also features a line-output, allowing you to use a different headphone amp if you wish.