Analog out makes use of CMSS for gaming and music and uses the X-Fi's DAC (digital to analog converter). Digital out doesn't make the sound better, it just keeps the sound digital further along the chain where it ultimately HAS to be converted back to analog. Using a digital out bypasses the DAC on your X-Fi (which is decent) in favor of a receiver usually (which can be better), as well as the "enhancements" X-Fi offers with CMSS. That said, if you are going to be using surround speakers and going to be playing games, you should absolutely use the analog out and multimedia speakers that have analog inputs.