Huh? I guess the very nature of the CD is that it is optical.
Yes, but the data read optically off of the disc is converted internally in a player to an electrical S/PDIF signal for digital outputs. If a Toslink optical output is used the signal does undergo a second layer of conversion from electrical to optical and back to electrical at the receiving unit via Toslink transceiver modules.
Most of the lab measurements with a jitter analyzer that I've seen usually show a much higher jitter on the optical outputs than the coaxial outputs. Whether that translates into better sound I guess depends on the particular setup, but in my own subjective evaluations with a CD player, a DVD player and a computer server, they all sounded a bit more focused and precise to me with their coaxial outputs.
For those interested in higher resolution music, many Toslink outputs have a 24/96 limitation which probably speaks to the nature of the precision of consumer Toslink transceivers.
So I usually recommend the coaxial over Toslink, unless a coaxial output is not available in which case the optical is awesome! I use a 35 ft. optical to feed a secondary system as I simply don't have a second coaxial output.
Steve