DAC=digital to analog converter. A DAC is inside each CD player, or home theater receiver as far as that goes. So you'd use either a outboard DAC or CD player. You could use a CD player or DVD player as transport to feed the DAC, transport being the part that plays and controls the CD. A transport isn't necessary if using some type of music server. So the transport or server would deliver a digital signal to the DAC. The connection from a transport being optical or coaxial while a server probably would be USB.

There's no way to tell you how it would compare, a lot would depend on how good each is. Many people enjoy turntable feeling it gives a more warm and pleasing sound. I've heard some great digital playback so I know it can sound good. I have both, both sound good to me. I'm not a strong hold for either camp. I will say that if an LP is to sound good it needs to be in good shape. Aside from LP's not being convenient there is potential for a lot of background noise. With my Rega and a LP in good condition it's hard to tell apart from a CD except maybe between tracks in that silent space, in regards to quietness. The only thing I can say regarding sound difference is that they are different presentations. Both are enjoyable to me.