I had written earlier that it's likely I am asking the wrong question. How could adding more to the signal path make the system sound better, not worse? It turns out the logic is correct: it cannot. So why does sometimes adding a preamp between a DAC and power amp help the system sound better?
Because it's helping the DAC not sound worse. And that bit of logic is key to answering the question.
So, now let's dive into how this might work. The answer, as you might guess, isn't just a simple one. It has many facets. Let's start with interconnecting equipment.
One of the problems systems face is driving cables. When you connect a DAC straight into a power amplifier the complex impedance/capacitance load presented by the cable itself, as well as the input of the amplifier, negatively affects sound quality.
This is one reason we can imagine DACs struggle without preamps between them and the power amp. Most preamps are designed for low output impedance and driving cables and their loads. But many DACs are well thought out in this regards too; some better than others.
But imagine we have a DAC with an identical output circuit to that of a preamplifier. How would this respond driving a power amplifier directly? Theoretically as well as a preamp and, perhaps, better because we haven't another component in the mix. But here's something you may not have thought about.
DACs are significantly more sensitive to power supply changes and noises than preamps. When an output stage struggles to drive a complex load, it is the power supply feeding its output stage that sees these changes. If this occurs in a preamp, it has little effect. But that same situation, when applied to a DAC, has very different results indeed. Small changes in power supplies have big impacts on sound quality–especially jitter.
So this is one reason, and there are more, some preamps can help a DAC.