A digital connection should be used for any and all digital sources, not just Dolby Digital.

There's no sense converting the digital data from a CD or digital cable box to analogue, when the very first thing that the receiver will do is convert it right back to digital.

Instead, it's better to pour the digital data directly into the receiver, and avoid extra (and unnecessary) D-to-A and A-to-D steps that could degrade the sound.