Because there’s an analog to digital conversion, Apple notes that the audio you get with the 3.5mm cable is not “truly” Lossless. Your device might be outputting Lossless signal, but what reaches your ears isn’t. You do get the very low latency feature though.Hoping someone clarify, if my APM (USB C) are wired to my MacBook Pro via the Apple USB C to 3.5mm adapter, and Apple music shows I'm streaming lossless 24-bit/96 kHz ALAC, will the upcoming APM firmware result in even higher resolution?
Can I listen to lossless audio using the AirPods Max Lightning to 3.5mm Audio Cable or USB-C to 3.5 mm Audio Cable?
The Lightning to 3.5 mm Audio Cable and USB-C to 3.5 mm Audio Cable are designed to allow AirPods Max to connect to analog sources. AirPods Max can be connected to devices playing Lossless and Hi-Res Lossless recordings with exceptional audio quality. However, given the analog-to-digital conversion in the cable, the playback will not be completely lossless.
Source: https://support.apple.com/en-us/118295