1-bit DACs belong to a class of DACs called "oversampled converters" or "delta-sigma converters" that take advantage of the fact that sampling a music signal more frequently w/ lower resolution is equivalent to sampling the same signal infrequently w/ higher resolution.
Advantages are: By oversampling the music signal, the reconstruction filter can be made of a lower Q, which means at the output of the DAC, the analog signal will have much less phase distortion than if an anti-aliasing filter would have been interposed bwtn the input & the DAC. Secondly, by oversampling, the quantisation noise in the recording is spread across the entire spectrum spanning DC to Fs/2, where Fs/2 = half the sampling frequency. Subsequently, when music signal in only the audio band is selected much of that quantization noise is rejected. This gives improved signal-to-noise ratio. For simple 1-bit DACs, the theoretical improvement in SNR for a 4X oversampled DAC is 6dB, for a 8X oversampled DAC, it is 12dB & so on. Thirdly, 1-bit DAC systems are supposed to have improved transient capability i.e. transient attack is better.
Disadvantages are: converter linearity, which speaks of the consistency of the converter's function. I.E. if the converter is fed THE same input signal repeatedly, the output will vary slightly. Thus a converter reputed to be 20-bits might be linear to only 18 bits meaning that 18-bits of info are guaranteed & the remaining 2 bits flucuate. Delta-sigma converters, by their nature, are highly non-linear circuits! They are usually operated (transparent to user) 6dB below full-scale. Once a 1-bit converter goes non-linear it's performance falls off the cliff! Design of such a circuit takes a lot of attention esp. in the audio arena where sound quality is totally paramount.
Kinda complicated answer + I could remember only the above mentioned pros & cons. I'm sure that I'm forgetting something this late @ night! I hope that it helps some. Delta-sigma converters are complicated & some EE is needed to explain them, I'm afraid.
