DAC or CD Player. Help!

Audioman2015, OP was merely asking what plays major role in CDP - DAC connection.  I believe that everything is important.  Jittery CDP will never sound good with the best DAC.  Poorly matched digital cable might affect sound of otherwise great CDP/DAC pair, etc..

All matters including cable.  Synergy is important.  In case of digital connection it will be output impedance of CDP, input impedance of the DAC and characteristic impedance of the cable.  It will also be length of the cable, slew rate of the CDP etc.  It is a system thing.

Price of cable might not matter, but one cable can deliver better sound than another.  Cheaper CDP can sound better than expensive transport when feeding DAC.  That is synergy.

jamcl63, Welcome.  I'm in this rabbit hole since 2005 for the same reason - to learn.  You pretty much answered your own questions.  Yes CDP has its own D/A converter and analog electronics but it also has digital output providing serial stream of data called S/Pdif (Sony/Philips Digital Interface Format).  As you noticed, CDP becomes a transport when this output is used instead of analog out.  Not every CDP has digital output.
Stream of zeros and ones on this output is being read by the DAC.  It is important to keep this stream of data steady since any time variation - a time jitter will convert into noise on analog side.