I created some diagrams to show examples of an audio ecosystem. The interconnected parts and the type of hardware and compression in the flow from digital stream to ear.
Audiophile set up, wired
This is a high end, audiophile set up. Uncompressed stream with high resolution music from Qobuz. The stream is received by a device (laptop) and converted from digital to analogue with a high-end converter (Dragonfly Cobalt) and listened to on a Beyerdynamic Headphone.
Apple set up, wireless
The set-up within Apple is more true to the sense of an ecosystem. All components and methods are connected. Where it says iTunes in the picture, you might now expect Apple Music. The stream has the same resolution as CD's had in the past, but is compressed by the AAC codec. The conversion from digital to analogue is done in the AirPods Pro. It is only decoded once.