edit: I'd be curious to see what people are using optical for today (I'm under the impression audio pros mainly use USB interfaces as well)
And it works great over ARC! The TV remote's volume buttons get passed through automatically, and it turns itself off and on along with the TV. I don't even know where the soundbar's own remote is anymore.
I have an external DAC/amp, and I had been using optical until I recently upgraded my workstation. Now I am using USB, because the new motherboard doesn't have optical; I assumed USB would be fine, so the lack of optical wasn't something I considered with the purchase.
Unfortunately there's an awful amount of hiss with USB on this DAC. I'm not knowledgeable enough to pinpoint what's causing it, but standard remedies I've found (eliminate ground loop, try ferrite cores, get a usb filter) have not made a difference. It could be the USB interface on the DAC side, I have no idea.
While I don't _need_ an external DAC, I like using one for a few reasons: mine has a low output impedance which is good for some headphones, a convenient switch to toggle between headphone and speaker output, and a big volume knob with really smooth action. I like it. The alternative is to use the motherboard's ports; this motherboard does jack sensing such that the rear line out gets disabled if something is plugged into the front, so switching between headphones and speakers involves plugging/unplugging the headphones all the time. I also don't like adjusting volume through a tray applet.
You'd be converting from USB to optical, at which point you'd break the ground connection which would be where your hiss is coming from (assuming it's still noiseless when still being used with optical). Then, your concern would be jitter and whether the added conversion is adding lots of jitter to the equation. Your DAC might (or might not) be good at rejecting jitter noise. I've got a Lavry DA10 that's exceptionally good at rejecting jitter (in crystal mode), but that's mastering grade and maybe overkill for you.
It wouldn't add literal noise, but it's also possible for the USB connection to be more jittery than a different computer making the optical connection. That's partly hardware and partly software design (controlling how the data stream is buffered, and associated things that might slightly modulate the audio data clocking). So a change in computer feeding the DAC could also substantially affect the 'sound' of the DAC, as well as the noise issue you observed.
This isn't a huge issue for me, it's just an example of where I'd prefer to use optical. If it ends up bothering me such that I need to fix something, I'll 'fix' the motherboard.
So it's the DACs fault, but maybe it's fair to say that it's harder to make a good DAC when USB is how the data is being delivered. I'm sure a high end USB DAC doesn't have this issue, but I'm pretty impressed with my cheap offbrand optical DAC that was $11. I'm guessing I would not be so impressed with the $11 USB version.
Optical has the benefit of always being electrically isolated.
Optical digital means perfect isolation from the ground plane of the computer. It's that simple. The DAC can do whatever it needs to manage its own noise levels, but you're pretty much guaranteed a huge difference from entirely decoupling the DAC from the computer's ground plane. That electrical interference can do a surprisingly enormous amount of damage to the analog circuitry of the cheap DAC, which itself is probably not very resilient at rejecting any sort of electrical interference.
If you used optical before, it can be reasonable to use USB->optical. A lot of USB audio interfaces already have this. I'm not making use of it, but the USB interface I have on my Mini has an optical out.
It doesn't matter that I have my audio preference set to "prefer external audio" because the effing thing decides to switch back and forth between 2 and 30 times on startup, and maybe 80% of the time it settles (properly) on the receiver, and 20% of the time it tries to use the TV speakers, which are off, and of that 20% of the time, at least half of the time I HAVE to power everything down and start all over again. The other half of the time I can go through the menu with the slow-ass on-screen menu, and manually toggle back to receiver.
I just want an effing option that says "never in hell try to use the fucking TV speakers, for the love of god".
Also, I've had compatibility problems with HDMI between my old Mac Mini and my receiver. I don't know how to troubleshoot those sorts of issues. I do know that optical audio always works perfectly with every device I've ever used it with, though.
I send HDMI to my TV which sends optical to my sound system, and it still works pretty well. Earlier this year I bought a nice sound system with a receiver for the reasons you mentioned, but it added extra lag to my video games, so I returned it. My current sound system also supports ARC but it causes most of the same problems. Decoding those fancy codecs creates lag on every system I've tried, so sticking to LPCM over optical seems to be the only way to enjoy games still.
Isn't that what it was before ? I swear I had previous mac minis with a combo port like that ... why would they not continue that ?
edit: apparently Apple TV doesn't have optical audio either.
This is just a standard annoying thing with Apple though. Their designs are very 'forward looking' in that they don't consider what potential customers already have so much as they do what their own future peripherals are going to need.
Anecdotally: I do have a Mac mini with my receiver, which I replaced this year. But the new receiver not only has USB input, it has wifi and built-in clients for Spotify, Tidal, Pandora, TuneIn, Roon, whatever protocol Windows uses for media sharing whose name I'm utterly blanking on right now, and a dozen or so other services, with Apple Airplay 2 theoretically coming in an update.