With the D-90, DAC mode defeats the volume control (for people who might be using a preamp or integrated amp). But, it also enables direct DSD conversion. Direct DSD conversion is an option for the AKM 4499 chip which allows DSD to bypass the processing of the AKM chip, and basically go straight to the converter section. This means that single bit streams stay single bit for truly native DSD conversion.
For folks interested in playback oversampled in software to high rate DSD (like me) this is a very desirable feature. See the block diagram on the data sheet I posted earlier in the thread and you can see the path of the Direct DSD mode (page 4 in the DS).