DACs, turntables (not including carts & phono stages), and cables are perhaps the best subjects for diminishing returns. The "extravagance tier" models employ absurd over-engineering plus gimmicks to justify their cost. These models will certainly sound different to more modest alternatives - some cite "diminishing returns" while implying that sonic differences decrease towards zero as price rises; that’s absolutely not the case. This stuff really sounds different. But does it actually produce better sound as you move up? Or just different sound, that only some will like better? The rate of audiophile disagreements, on forums like this one, heavily implies the latter.
At the end of the day, the mastering still dominates - over DACs and turntables - how pleasing we find the resulting sound quality. That’s the #1 source of diminishing returns here.
DACs are funny because they started out as a pure engineering challenge (and a very tough one at that), so most DAC chips at their core, even going back decades, are quite well engineered, accurate solutions. It’s up to hifi companies to think up wild Rube-Goldberg-esque solutions to bolt on top of and around that. With turntables it’s all about selling the "gimmick" and then showing off how much you’ve over-engineered for that. Then as audiophiles we endlessly try to rationalize why we like some models over others - whether our reasoning has and basis in reality or not, it gives us something to do :)