Pipewire faq has been updated. Analog is the correct answer. FAQ · Wiki · PipeWire / pipewire · GitLab
What are those *Analog Stereo* and *Digital Stereo (IEC958)* profile?
TL;DR: You want to use the Analog Profile, it will sound best. Digitial Profile is only used in specialized cases as you can read below.
The [Digital](https://alsa.opensrc.org/DigitalOut) Stereo Profile is meant to send uncompressed stereo and compressed surround formats such as AC3, DTS or Dolby Atmos digitally to a receiver to be decoded by the receiver. It bypasses part of the mixers in the hardware and makes the digital signal available for receiver with either a coaxial S/PDIF cable, an optical S/PDIF cable or an HDMI cable. If you do not have a receiver that can decode these streams, you should use the Analog Stereo profile to get better mixer controls.
If you select this profile, you should probably also select the codecs that the receiver can decode, see the advanced tab in pavucontrol. Uncompressed stereo PCM can always be sent over IEC958 but not all receivers support the other compressed formats.
Some hardware does not have a coaxial, optical or HDMI output but you still have the profile available. This is likely because hardware has the feature but is not made available. With the right model:vendor id (see with lsusb) it is possible to make a custom profile and remove the non-functional IEC958 profile.
Most hardware has the Digial output also connected to the DAC so that it will still produce output on the Analog outputs, usually with likely less optimal mixer settings (volume too low, less bass, ...).