A comparison made with the Bel Canto 2.5 and the X1 Dac...the difference was minimal.
Question: does it come with preamp?
Yes, the comparison was made in a post on Head-Fi, I don't know the gentleman and he seems pretty new there, so didn't post a link. He liked it as much as a Bel Canto 2.5 and a Keces 151, which seemed a little too high praise to be credible, but it don't hurt.
Also want to know how it functions as a preamp! Is the volume in the digital domain?
Yes. I should have mentioned the Dark Lord review is wrong, it works as a preamp even when not using headphones. If you read down in the replies you see he was corrected and he later confirmed he was using the buttons wrong. The RockGrotto poster shows pics of the manual, all of the manual, every page, and pics of every view you could want of the darn thing, boy he's thorough. Anyway, you can read the manual there and see you have to push some combination of the two buttons to make the "P-line" LED light up for the unit to function as a preamp.
No, it doesn't work in the digital domain. For this price we're lucky the thing works in the analog domain. I highly doubt there's an expensive pot in there. If I buy this one I'll certainly try it as a preamp, but fully expect it to sound better running line out through my preamp. However it would be a happy surprise if it did sound better.