Selecting ALSA Audio Output Device – SPDIF or Analog?

I probably should know this, but asking publically in case the answers (I hope I get) help others.

I am using a USB DAC (Arcam irDAC) with Kodi 17.1 on a RPi 3. Under Settings>System>Audio for the audio output device I am offered 2 options:

– ALSA: ARCAM USB AUDIO, S/PDIF
– ALSA: ARCAM USB AUDIO, Analog

I always use the Analog one (with Number of audio channels set to 2), and it sounds just great. But with the S/PDIF one selected, instead of number of channels I get to set a “limit sample rate” value.

What are the technical differences between these in processing by Kodi, and what is passed to the DAC?
Which option (Analog or S/PDIF) should I choose to get the best audio result?