How is more than 16 bits better for CD?

Shadorne wrote:

" So the extra bits of a 24 bit DAC playing 16 bit CD data only help improve performance when PROCESSING the signal, such as upsampling and EQ adjustments. It does not improve the dynamic range of the original 16 bit CD data. A higher accuracy (24 bit DAC versus 16 bit DAC) will reduce artifacts from "rounding/truncation" in the processing. (Upsampling 44.1 Khz data being a processing step)."

I never thought of the truncating process that is surely ocurring during writing on a CD down to 16/44.1Khz from original 24/96 khz recording. It seems the increased word length and upsampling is trying to 'simulate' the Original signal that was truncated. Very interesting!!

Am I interpreting correctly?

Do any of the chip manufacturers even currently make 16bit chips for audio use?

My understanding is that the extra bits are to increase the accuracy of the most significant bit since a 16-bit converter cannot, in practice, do a 100% linear conversion.

I believe that the Consonance "Linear" CD Players use a 16 bit/non oversampling DAC

Transnova is correct. I have the Consonance CD Linear and it is a 16 bit, non
oversampling/upsampling (unless you punch in the 88.2 option) with no op-amps and most importantly, no digital filter to mess up the sound.
I know this will sound lame but it seems to me that when you increase the bits, its like tracing over and over on an original drawing.
Sure, it will be 'like' the original drawing, but now you have a bolder line that creates its own version of the original, while at the same time masking/destroying the subtle clues and character of the original. Hence, a 'bolder' bass, 'sparkling' highs, and a somewhat bland middle as it 'guesses' where the lines should be drawn.
I was told that when you go up to (what was it?) 20 or 24 bits, it akin to having a reference point every nine inches from LA to NY.
Sounds like overkill to me when all one had to do was remove the digial filter and properly implement 16 bits as intended.
Don't want to start a firestorm here but its my take and I love the sound.