A DAC converts digital audio to the analogue signal your amplifier and speakers use, and every digital device you own already has one. So the real question is not whether you need a DAC (you have several) but whether a better one would be audible in your particular chain. Usually the answer is not yet.
Where an external DAC earns its place. A laptop headphone rig, where the built-in output is noisy and weak. An older CD player or streamer used as a transport, whose conversion is from another era. Any system where the built-in conversion is the demonstrable weak link, and demonstrable means you can hear noise, hiss, or a hard edge that changes when you swap the source.
Where it usually does not. Modern AVRs and decent streamers. Their internal conversion is already competent, and measured differences between it and a good external unit are small: fractions of a dB in response, distortion products well below what a room adds. Can the difference exist on a bench? Yes. Can you hear it through speakers in a room with marble floors and a glass front? I would not bet on it, and I have tried.
Which is why our order for upgrade money is fixed: speakers first, then room and calibration, then amplification, and only then sources and DACs. Each rung up that ladder changes more of what reaches your ears than the rung above it. The DAC is at the top for a reason; it is where the last few percent live, and only if the earlier percent are already handled.
Done the first three and now chasing the last few percent? Then bring your specific chain: source, amplifier, speakers, how they connect. Generic DAC advice is how people buy twice, once for the box and once when they realise the speakers were the limit all along. If your chain is a laptop and headphones, on the other hand, a modest external DAC and headphone amp is a fair first purchase, and I will say so.
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