How does the digital bypass on home theater processor work

I think you might be thinking of this backwards.  The idea is to run the front L/R preouts from the prepro to an analog input on the Mytek.  That way only the Brooklyn is in the playback chain for critical 2-channel listening and the prepro is completely out of the circuit.  I don't think your DAC has a HT bypass function, so you can just choose a reference volume level on the Mytek and use the prepro to balance the channels. 

Doing it the other way, the Mytek's signal would have to go through the prepro before going to the amp, which kind of defeats the purpose.  Hope this helps. 

I don't think the Mytek Brooklyn DAC Plus has an analog input. After all it is a DAC that happens to have digital volume control built in. 

Thanks for the help. Let me restate what I am trying to do so I am sure that I have it correct. I am combining my existing stereo system with not yet purchased home theater system-thinking of Anthem AVM 60 or Classe Sigma SSP used or new possibly Rotel 1576 or 1582 if in the buget.
I would just like to plug my existing Mytek DAC+ in to the processor and use the bypass because the Mytek has MQA steaming and also phono stage which so far the used processors I am looking at do not have the phono option. So from what I have been told this will work? Moving to Mexico so I need to get this right. Also thinking of Krell S-1500 or Theater Standard as well as Anthem 5 channel power amps all used so I don't have to pay duty unlike the Rotel products.

Given what you're looking to do, and that unfortunately the Mytek looks like it only has one analog input that presumably will be taken by your turntable, you'd just run the analog out from the Mytek into the front L/R analog inputs on the prepro.  It's unfortunate because the output from the Brooklyn will have to pass through the prepro rather than passing directly to the amp. 

Maybe someone else has a thought, and just spitballing here, but if there's a high quality RCA 2 to 1 switcher that could take the outputs from the turntable and the front L/R outputs of the prepro and plug that into the analog input on the Mytek that could possibly be a workaround.  If you were confused before, I'm sure this only makes things worse. 

If 2-channel is relatively more important to you, a potentially cheaper way to go would be to get a decent AVR (Anthem, Yamaha, Marantz) to handle multichannel processing and amplifying your center and surround channels and buy a good integrated stereo amp with a HT bypass function.  With this setup, although you wouldn't be using the preamp function of the Brooklyn, only the DAC and integrated would be in the signal path for 2-channel and you could switch to HT with the push of one button.  This is the generally the way most people do it when combining a stereo and home theater system into one.  I think what you're trying to do is seamlessly pass through the signal from the Mytek through a prepro using an analog pass through (bypassing the volume control) on the prepro.  I'm not sure that pass through function exists on a prepro (unless maybe there's a way to use the tape loop to do it?), but regardless you'll end up having to send the DAC's signal through the prepro, which is really what you should be trying to avoid from a more purist perspective -- hence the recommendation for an integrated amp above. 

Now that I've probably got you thoroughly confused you I'll just sign off and leave you twisting.  Heh heh.  Just kidding -- I really am trying to help here.  Oh, and don't drink the water. That one's simple. 

Sorry my bad it turns out that your Mytek Brooklyn DAC Plus has one pair of analog input (rca) that can be configured as either linestage or phonostage input. But your Mytek does not have HT bypass or HT passthrough function. Therefore, you cannot use your Mytek as an all-in-one preamp and cannot expect to function as both linestage, phonostage and HT bypass. You will need a dedicated stereo preamp that can do all those functionalities. Or get a high end pre pro that performs really well in stereo for your stereo music playbacks for simplicity.

Out of the 3 pre pro choices that you listed above I highly recommend the Classe Sigma SSP if you value stereo performance for 2ch music playbacks. The Classe Sigma SSP is optimized for stereo music playbacks and its stereo performance is very good very musical especially coming from an AV pre pro whether when used as an anolog stereo preamp in bypass mode or when used as a digital stereo preamp connected via its USB input. But the Classe Sigma SSP lacks phonostage.

I suggest that you connect your Mytek via XLR analog to the XLR stereo analog input on the Classe Sigma SSP and set the Sigma SSP in digital bypass mode thus bypassing its DAC, DSP and other digital processings so the analog signal is kept in analog domain all the way to analog output stages, or otherwise DSP and other digital processings will get in the way and would have negative impact on sound quality. But first you must set the output of your Mytek to fixed thus disabling the volume control.
So you will use the volume in the Classe Sigma SSP basically you will be using the Sigma SSP as as analog stereo linestage preamp.
If you go with the Classe Sigma SSP you wouldn’t be needing a dedicated stereo preamp that has HT bypass function. The Sigma SSP performs really well in stereo and is optimized for stereo music playbacks.

As for phonostage I highly recommend that you get a standalone dedicated external phonostage preamp for your turntable. Standalone dedicated external phonostage pre will perform and sound way better than the one built in the preamp or pre pro or integrated amp. I highly doubt that a phonostage in your Mytek is any good either. Phonostage preamp plays important role for musical reproduction of your analog rig (turntable). There are countless options out there when it comes to dedicated standalone phonostage preamps depending on your budget. Audio Research, Musical Fidelity, Rogue, Cary, Rega, Naim, Pass make very good phonostage preamps. You can connect the phonostage pre via rca analog to the rca stereo analog linestage input on the Classe Sigma SSP and again you will have to select a digital bypass mode for that input on the Classe.

However, the Anthem AVM60 performs extraordinary in surrounds for movies (home theater) with its ARC2 (Anthem Room Correction) engaged and properly calibrated but its stereo performance for 2ch music playbacks isn’t on par with the Classe Sigma SSP. The Sigma SSP stereo performance is superior to the Anthem AVM60. But for surrounds or home theater the Anthem AVM60 will be a better choice than the Classe Sigma SSP and will likely outperform the Sigma SSP. If you go with the Anthem AVM60 I suggest that you get a high quality analog stereo linestage preamp that has HT bypass or HT passthrough feature for your stereo music playbacks. I think Soix has already given you instructions above on how to do it.

I would stay away from Rotel AV pre pro if I were you. Rotel always has had persistent issues with their HDMI switching boards and are very buggy. They also have firmware bugs and glitches with their AV processors and receivers. Rotel makes great sounding and musical amplifiers for the money. Their power amps, stereo integrated amps and stereo preamps sounded very good for the price but their AV processors and receivers are buggy.
Just wanting to warn you ahead of time.

Good luck and let us know what you end up getting.