If you use a digital connection from dvd player to receiver, then the player simply reads the bits off the disc and transports them to the receiver for decoding (assuming you set the dvd player to 'bitstream').
The 5.1 analog outs are for dvd-a/sacd, although you can hook them up too and switch between the digital and analog connections to compare sound quality if you like.
The receiver has other features like dynamic range compression (called 'late night' on the Onkyo) and of course multiple surround modes, so it's generally best to use a digital connection from the player to the receiver so that those features are available.