What - Is Realtek Digital Output

is not a physical device — it’s a software-based audio endpoint that appears in Windows (or other OS) when you have a Realtek audio codec chip on your motherboard or sound card. It represents the S/PDIF (Sony/Philips Digital Interface) output capability of your system.

— USB can carry higher-resolution multi-channel audio. Optical avoids electrical noise (ground loops) and is simpler, but USB is more flexible.

In short:

“Realtek Digital Output is better quality than speakers/headphones jack.”