An AD/DA converter is an analog-to-digital/digital-to-analog converter. As Numerical said, any audio interface has this. In fact, your computer has one for all of its audio hookups; microphone, headphones, and surround sound.
If you're interested in expanding and improving your current audio device (if you are using your built in audio), you may consider purchasing an audio interface, which provides input and output options for your computer audio application.
Numerical was already saying this...
An AD converter takes an analog signal and changes it into 0's and 1's. It does this by sampling the signal at a regular frequency (for example 44.1kHz, or 44,100 times per second (hz)) and quantizing that value into a certain bit sized number (for example, 16-bit or 24-bit). The higher the number of bits you use to quantize the signal (or bit depth), the more values you can represent. CD Audio operates at a 44.1kHz sample rate, and at 16-bit depth. This is acceptable for most uses, however professional studios usually use 24-bit.
This information is taken and usually stored as a wav, aiff, mp3, aac, flac or other type of audio file. When you play back a file, these files are sent to the DA converter. What the DA does is what the AD does, only in reverse. It reads the numbers stored in the audio file, and reproduces the waveform as an electrical signal, which is then sent to your speakers or headphones, and propagates through the air as sound.
There's lots of tutorials online and articles you can read on this subject. Here is one:
http://www.jiscdigitalmedia.ac.uk/au...-digital-audio
There's plenty of others if you look. Wikipedia is never a bad starting place, however be sure to check out things people have written online. There may even be some info on this very site.
