DSD = Direct Stream Digital; sigma delta modulation @ 1 bit, 2.8224 MHz sampling. It is the SACD standard. The C2500 has a pulse code modulation-only DAC that goes up to 32 bit, 192 kHz sampling. PCM is the foundation of the CD Red Book standard (16 bit, 44.1 kHz). The DAC in the C2600 has both PCM and DSD.
Regardless, the real magic of the C2300/2500/2600 series is the analog phono section. One of the best out there.
Hope this helps!