Digital only increases/decreases in steps (set by the resolution of the DAC - 8, 10, 12 bits), but can be controlled by a micro. Analogue volume control is infinitely variable and done with a potentiometer. It will incur some noise as the track moves on the wiper, but will give theoretically infinite variability. You cannot control it from a micro though. Each has benefits and drawbacks. Obviously as your DAC resolution increases, your step size gets smaller so you get nearer to infinite variablity