New TV: what to do with TOSLINK optical output

Your Cambridge 640A is a stereo analog integrated amp and has no DAC that’s the reason why it doesn’t have any optical digital input or any other digital inputs. Stereo analog integrated amps such as your Cambridge 640A only have analog audio inputs.

You will need to get a stereo integrated amp that has built-in DAC thus have digital audio inputs. Assuming that all your AV source devices have HDMI outs, if that’s the case and I imagine nowadays that all AV source devices would have HDMI outs, then you should consider getting the Cambridge AV receiver either the CXR120 or the CXR200. Cambridge Audio makes very good sounding av receivers and are priced reasonably. Then you can connect all your AV source devices using HDMI cables to the HDMI inputs on the Cambridge AV receiver. And you can use a single HDMI cable to connect the Cambridge AV receiver to your TV for video and OSD only. All AV receivers these days have at least one if not two HDMI output to connect to your tv display or a projector for video and OSD only. This would be the best way to set up.

@mrgreenfur

If you’re only doing stereo then get a stereo integrated amp that has built-in DAC therefore will have various digital audio inputs such as USB, spdif (coax digital audio) & optical digital (Toslink).
The Hegel that you mentioned earlier will be a good option as long as it has DAC and thus will have various digital audio inputs. The Cambridge Audio also makes great affordable stereo integrated amps some models are analog only and have no DAC some models have built-in DAC so will have digital audio inputs. Rotel, NAD, Musical Fidelity also make affordable great sounding stereo integrated amps with built-in DAC so therefore will have various digital audio inputs.

And you can connect your PS4 using spdif (coax digital audio) cable or optical digital audio cable to one of these stereo integrated amps and let the DAC in one of these integrated amps do the digital-to-analog conversion.

You can connect your laptop using a USB cable to the PC USB DAC input port on the integrated amp.

Stereo integrated amps will sound better than AV receivers for stereo music playbacks. 

I never said that HDMI would be best connection for audio only but it is the only digital connection that can transmit those lossless surround sound formats eg DTS-HD MA & Dolby True-HD, Dolby Atmos to the fullest resolution bandwiths for his AV sources from his Sony PS4. This setup is mainly for his AV sources, not strictly for two-channel listenings. I’m also aware that HDMI isn’t the best digital connection for two-channel audio only source. Everybody knows that.

The reason I recommended the Cambridge Audio receivers to the OP cause Cambridge makes great sounding av receivers at affordable prices points. The CXR120 is only $1200 and the CXR200 is only $2k but they sounded very good, better than much more expensive Japanese AV receivers that are loaded with features bells & whistles.
With this Cambridge receiver the OP can also connect using other digital connections such as USB, spdif (coax digital) & Toslink (optical digital) for his audio only two-channel music materials and use HDMI for his AV sources from his PS4.