You’re mistaken - the digital signal is driving the PWM output stage. There’s no DAC because it’s not needed. This is also how the Raspberry Pi onboard audio works. There are details in this article:
https://hackaday.com/2018/07/13/behind-the-pin-how-the-raspberry-pi-gets-its-audio/
To the OP, I think we’re already there. DACs are a mature technology. A well engineered DAC that sells for $100 is going to sound great and possibly better than any other DAC costing more (including thousands of dollars more) in a blind test.