It does indeed convert all analogue signals to digital - from memory I think it uses a 24 bit 48kHz convertor.

It makes sense as you obviously can't apply any DSP to an analogue signal unless it is converted first.

Main: 861v8+ID41, 218, HD621, DSP8000SE u, DSP7200SE u, DSP7200HCSE u, Oppo BDP103D, LG OLED557BV.
Second: 218, DSP3200, DSW.
Other Rooms: 1) F80 + MS200. 2) F80 + MS200, 3) F80 + R Pi. 4) F80 + R Pi, 5) F80 + R Pi
Vintage: 207 CD Pro, Lecson AC1 + FM1 + AP3 MkII, Quad ESL 57s