I know Jimmy2sticks knows more about this than me, but if the USB protocol allows for 24 bit operation, then you can have software control of the direct monitoring.
Also, I checked with my friend who works for Steinberg, since they developed ASIO 2, and their software seems to be the only one really using right now, as it's pretty new. I'll copy what he had to say. And then we can all agree this post has gone on long enoug, I think. HaHa.
Every
system is a little different with regard to direct monitoring. In Cubase,
if the hardware is capable of Direct Monitoring, it will be able to be
checked in the VST Audiobay. If it is checked, then the routing selected in
Cubase will still control the connections but there should be zero latency.
Its definitely not a hardware change, like with moving parts, but when my
RME card sets up its routing its all done either through Cubase or through
RME's own software for the 9652.
I don't know how it works in other programs but in ours Direct
Monitoring means that the sound card is capable of monitoring back the
outgoing signals along with the incoming signals, all before the incoming
signal enters and leaves Cubase. Therefore, you can use the plug-ins
because they are inside the software.
I think we've been arguing over a term that Steinberg came up with. So their "Direct" monitoring is still post A/D conversion, but I guess their new ASIO 2 drivers are lower latency (I've never measured ASIO 2) that they feel they can claim no-latency. Again, I've never used this system.
However, the more "traditional" all analog pre-A/D conversion hardware monitoring is also sometimes referred to as "Direct" monitoring as well. So it looks like it's not so simple as to say "Direct" is one thing, and "Hardware" is another.
But it is pretty cool if you really can get very low latency, post A/D with ASIO 2, and be able to monitor with plug-ins.
Whew!