Player decodes and outputs over MCH Analog Outs and Source Direct OFF
1) People who own non-HDMI receivers or can't handle MCH LPCM over HDMI.
2) The DAC's in the player are much better than the receiver's DAC's.
3) As explained in point 2 above, you WILL get -15dB drop if ANY speakers are set to SMALL due to redirected LFE. This has been a limitation of analog since the early days of analog decoding. People are just discovering this quirk because we've been digital for so long! Same necessity to further boost +5 in the AVR/prepro applies since the player maxes out at +10dB for LFE. If that additional +5 boost is a problem, set all speakers to LARGE.
Player decodes and outputs over MCH Analog Outs and Source Direct ON
1) Similar to above with the exception that your AVR/prepro has the capability to post process over the MCH analog outs. It is rare to be able to redigitize and apply delay, BM, etc. after the player's DAC but these processors do exist. Most analog users will want Source Direct OFF.
Most of these findings I've discovered on my own but I wasn't able to connect the similarities b/w HDMI Source Direct OFF and analog MCH out until I read Kris' review of the 3800:
"All 7.1 channels feature full bass management and level controls for PCM signals sent via the HDMI or analog outputs. In my experience, level adjustments over HDMI are unique to the DVD-3800BDCI."
That little passage made me realize that for better or worse, Denon gave the user much more flexibility than anyone could possibly imagine. It also gave the possiblity of users like sharok discovering the "-5dB hole" that is normal to analog users but unique to HDMI until you consider that with Source Direct OFF, it acts exactly like analog!
So in conclusion, this "-5dB hole" is easily accounted for by:
1) Boosting LFE by +5 in the AVR/prepro
2) Setting all speakers to LARGE (prevents redirected LFE and the -5dB)
3) Simply turning Source Direct to ON and letting the receiver do all the work.
Remember, this "-5dB hole" is normal when redirected LFE is involved. It is not like the common LFE bug but we took notice because what we should have expected in analog was happening to HDMI with Source Direct OFF.
Edit: If you would like further reading on the common -10dB for LFE vs the -15dB LFE w/redirected bass, please read the first post of this thread:
http://www.avsforum.com/avs-vb/showthread.php?t=748147
Remember, that it comes from the analog angle but fits very well with what is happening with HDMI and Source Direct OFF (with at least one speaker set to SMALL of course).
Edit: Note that the -15dB referenced above for LFE is due to the fact that LFE is recorded -10dB to begin with and there is a further -5dB drop from redirected LFE. If Source Direct is ON, then LFE will be the conventional -10dB lower than the other channels as expected; if you are doing HDMI LPCM, then the +10dB must be provided by the AVR/prepro.