Okay, bit of confusion been introduced there! Essentially, the Airport Express can output both an analogue and a digital signal. When outputting an analogue signal, the digital signal the Airport Express initially receives from your computer (or iPod / iPhone) is converted to an analogue signal by the Airport Express by the internal DAC (Digital to Analogue Converter). This is the signal the stereo amp can then use to amplify and send to speakers and is carried by the 3.5mm to RCA cable (like the iChord).
If using an external DAC, you would then want to export the digital signal directly out of the Airport Express, bypassing its own internal DAC. This is transferred to the external DAC using an optical cable, and here, the digital signal is converted to an analogue signal. This is then passed on to the stereo amp via standard RCA phono leads where again, the amp can amplify it and send to the speakers. This should improve over the first option, as the DAC built into the Airport Express, whilst good for the money, can easily be improved upon by spending a bit of extra cash.
Finally, if you have a stereo amp which has a built-in DAC (and this would have an optical input), you can again transfer the digital signal directly from the Airport Express to the amp via an optical cable, whereby the stereo amp's built-in DAC will convert it to an analogue signal and then the amp can amplify this and send to the speakers. Again, this should improve over the first option because it's likely the DAC in the amp will be better than the one in the AE. However, this is a relatively rare option as most stereo amps don't have built-in DACs (none of the ones I listed on the previous page do) - hence why external DACs are very popular at the moment.
So the key difference in each is where the DAC sits and thus where it gets converted from a digital signal to an analogue format that the stereo amp is then able to amplify and send to the speakers. You would thus never do things this way round:
Daniel 1:AE = > optical cable = > amp = > RCA = > Dac
as the last destination would always be the amp after the signal had passed through the DAC.
Hope this makes sense!