In the past, many musicians have been forced to use a digital output so that they can
connect it to an external D/A converter for better audio quality (see Why do some
soundcards have a digital output, but no digital input?). This is still a useful facility,
but less important, as most modern soundcards have much lower background noise.
If you have a standalone digital recorder such as DAT, having a single digital In and
Out will allow you to transfer recording to and from the PC with no loss of audio quality.
This is one way to back up hard disk based projects to free up space on your drive
(although rather slow). Some people are using a CD-R drive to burn backups of their audio,
and in this case you could manage without any digital audio I/O at all.
Several multichannel cards are designed specifically for interfacing to 8-channel
digital recorders such as ADATs, and therefore have a single 8-channel digital input, and
an 8-channel digital output. They will often provide a single stereo D/A converter, so
that you can monitor an analogue stereo mix as well. If you already have an ADAT recorder,
these are a cost-effective way to add 8 analogue ins and outs to an all-digital soundcard.
Another use for digital I/O is to sync soundcards together some allow you to use
the digital output from one card to provide a suitable input signal to lock the second
card to this. This can be useful if you are attempting to run several soundcards side by
side, but never as satisfactory as having a single more powerful card to do everything.