Digital to Analog Converters transform binary digital music data comprised of strings of 0s and 1s into an analog audio signal ready for your headphones. DACs are found inside almost all modern portable audio devices including smartphones, tablets, laptops and PC computers.
Using a good DAC can improve upon sound quality - provided the outboard DAC is a better D-to-A processor than already exists inside the source. Many of today's headphone-ready devices have vastly improved built-in DACs over previous editions, making the use of an external DAC device superfluous in some cases.
USB-connection DACs remain the most popular DAC type and are used with computers, tablets or laptops. They can also be used with other devices such as recent smartphones (with appropriate cable/adapter interconnects) or with audiophile portable media players featuring digital-output ability. Some DAC devices have optical and coaxial S/PDIF digital inputs as connection options.
Some DACs are portable via battery-power, and some can even be powered from the source device itself, such as from a laptop computer's internal battery for example.
DACs are available either as separate 'stand-alone' components, as 'all in one' combos that include a built-in headphone amp, or even part of an integrated amplifier unit.