Digital signal by definition doesn't gets noisy. It's ether passes bits or it doesn't.
Potentially an issue with long usb cords or high bandwidth required (hd video).
What you may experienced by using usb cord to external dac is a em/rfi noise which has nothing to do with digital portion, everything to do with your crappy power supply and other badly rf designed components in your pc.
I have a situation right now, where I use the PC USB port to go to the receiver USB input and play audio (either wav, mp3, or CD itself). The sound is not good, very strange even. It has a smaller frequency range, as I have to enhance the high's and low's in order to hear the same detail, plus it is somehow convoluted sound, unnatural, cannot even explain, but it is obvious, not just some little difference that maybe you would not detect if not warned. It is a real bad sound.
Now, this is a digital signal, just bits, just 1's and 0's, as you mention. And it goes badly from the PC USB out to the Receiver USB in.
I spoke to the Receiver tech people and they confirmed their internal DAC is of good quality and was tested.
The PC is not the best around, but decent enough to be able to listen to the music and enjoy it with a Grado pair of cans.
After some research online, I found Schiit Audio company and told them the story. I wanted to buy an external DAC from them and see if that one works.
Their Tech Support advised me to try a USB decrapifier (called WYRD), which might clean the USB port, mainly by stabilizing the USB 5 VDC power (voltage).
As we all say, these are only 1's and 0's, and they came badly, heck knows in what order, or time difference, from my PC USB port.
As soon as I inserted the USB decrapifier between the PC and the Receiver USB ports, the sound became normal.
I also bought a CD player in the meantime, and I can say the sound from the CD player via analog RCA and the PC via USB, with the decrapifier inserted, are virtually identical.
This is a clear example that digital signal can transmit badly, not only "perfectly, or not at all", as you guys try to convince the world about.
Clock misalignment, jitter and other stuff can happen to a digital signal.
If an external DAC has its own USB decrapifier inside, then it's ok, no need for a separate one.
But in my case, the internal DAC of the receiver seems not to have it. And I kinda believe many internal DACs do not include a USB signal cleaner or power stabilization.
So you need signal cleaner and electronic/electrical stabilization, even with the digital signals.
The example is in front of my eyes.
Another issue is the DAC itself. Every CD player, or other source has its own type of DAC. As long as they are not identical, they will produce a different analog signal, even if the digital signal is the same.
I agree that you do not need an expensive CD player, but a decent one, with a decent DAC. And I agree that for a decent CD player, there is no need of an extra external DAC either.
The whole point is that even being made only from 1s and 0s, the digital signal can be noisy, or mixed up, or messed up, anyway you want to call it, but can transmit badly from point A to point B.