According to my limited historical knowledge, DSD (or SDM, PWM, PDM, 1-bit PCM) was initially an archival format. Back in the day, A/D converters had a 1-bit quantizer, so it made sense to save the raw quantizer output in an archive. The idea - as with any other raw format - was probably to let applications decide for themselves what rate and bit depth to use for mastering. This is probably why DSD is a choice for analog tape archival. Once edited however, there is no good reason to go back to DSD for storing or distribution. It does make sense to use DSD up-sampling for rendering at playback time. That is because, as @Bill_Janssen said, of the simplicity of the D/A stage. All you need is a comparator, so there’s no problem with component tolerances. Same goes for the A/D process. That’s the main advantage of DSD. Many DACs today use internal multi-bit D/A stages, with definite advantages over DSD in terms of dithering and quantization noise.