Analog class-D amplifiers at some point convert a small analog signal to a large one. There may be a DAC up front to allow for digital input, but the bottom line is that the gain is performed in the analog realm. Digital class-D amplifiers never convert the signal to a small analog signal: the signal remains in the digital realm until the output stage, at which time it becomes a large analog signal. Also, It is important not to confuse “digital” and “PWM”. The amplitude of a digital signal is not important as long as it is sufficient to meet the noise margin requirements of the system interpreting it. The amplitude of a PWM signal is important, because at some point something is going to integrate it – whether the feedback network of the amplifier or the output filter/loudspeaker combination.
One downside to digital class-D amplifiers is that they have no analog feedback. This means that unless alternate means are used, the amplifier exhibits 0dB PSRR (i.e. any noise in the power supply will find its way to the output). Some solutions have made use of a well-regulated power supply to reduce this effect, however this is simply “sweeping the dirt under the rug”, by offloading the analog feedback to another part of the circuit. Other designs use a 1-bit ADC to measure the output signal and provide some means of feedback. A more elegant solution is to use the DSP that is invariably present to provide feed-forward error correction of the digital signal, based on measured parameters.
Overall, despite the downsides, digital class-D amplifiers are the way the industry is heading, if for no other reason that this one: manufacturability. Corrections to analog circuitry are difficult during the development process and may be next to impossible once production starts, especially for larger volume products. However, firmware changes are much easier by comparison and this may be all that is needed to fix problems in a digital amplifier. When time-to-market is critical, the faster, more efficient solution often wins out.