Imbalanced sound at low volume
Cheap potentiometers, like those often used in headphones, tend to have large channel imbalance at low levels since mechanical inaccuracies in the construction have a magnified effect in those sections.
The recommendation that you not use digital volume control generally only applies if you have a good powered analog volume control like the potentiometer on a heapdhone amplifier (and even then, isn't always valid). The impedance mismatch and reduced damping from lowering the volume using an unbuffered series potentiometer like those used on passive headphones are massive compared to any noise contribution that digital volume control could ever produce.
Why digital volume control doesn't matter for anyone who's just plugging their headphones into their computers:
The issue with digital volume control is that you lose the least significant bits of the digital signal when you attenuate it. There are methods to mitigate this error, but I will ignore these and instead focus on a simplified worst-case scenario to show why concerns about digital volume control for the end listener are in most cases overblown.
If a 4-bit signal for instance is represented as [0,1,0,1], then to reduce its level 50% it would become [0,0,1,0] and noise would be introduced due to the error caused by losing the information contained in the last position. In this case, the 4-bit representation of 5 changed to 2 when reduced by 50%; however, 2 is obviously not 50% of 5! Because the odds of this error are functionally random with most signals of interest (corresponding to whether or not the smallest bit is a 0 or 1) they can be treated like white noise.
Furthermore, changing level by something other than a factor of 2 would introduce additional error: in our example, for instance, attempting to reduce the volume by 10% is impossible without introducing error since there are only 16 valid levels in a 4-bit signal to begin with.
However, note that these errors are only introduced at the level of the least significant (smallest) bit. On a 4-bit signal this error can be no greater than 1 part in 16 relative to a full-scale signal. On a 24-bit signal like those used for volume control in most modern devices, this error is limited to 1 part in 16 million. Note that a 16 bit signal (CD-quality) has an inherent digital noise level 8 bits greater than this; volume on a standard end-consumer audio track may be reduced by up to 48dB, or a factor of 8, before the noise from the volume control begins to overtake the minimum amount of noise already guaranteed to be present in the recording. Windows volume set to 2/100 on default settings (the lowest that can be achieved on most computers) is only roughly -33dB; in other words, as long as you are using a 24 or 32 bit output device setting, it is impossible for Windows volume control alone to appreciably reduce the dynamic range of 16-bit audio playback on most computers. For a signal chain containing higher bit depth files or multiple stages of amplification/attenuation the outcome might be different, but for the normal end-user already using default Windows settings, it doesn't matter.
TL;DR: If you're just plugging your headphones into your computer, set your Windows output device to 32 bits and don't worry about volume control.
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