It's not esoteric, hear my example - just a low output pickup single coil guitar into a lead type of amp in the digital domain which will have plenty of gain in the digital domain. Is that really esoteric?
That's because after a bunch of digital gain, you are elevating the ADC noise floor and start competing with the guitar noise floor and worse the ADC noise floor is Wideband noise which will start to be noticeable in that context.
Julian literally says the same thing I'm saying right here:
https ://youtu.be/beXVfl1TSD0?si=gJAvPioGgg2Pz6Hn&t=428
Yes, if you record a signal very quietly and then apply a lot of gain later, you raise everything: signal, source noise, and ADC noise. That part is not in dispute.
The real question is whether ADC noise is ever the limiting factor in a modern guitar DI into interface into amp sim workflow. In practice, it almost never is.
Modern interfaces have ADC noise floors around -110 to -120 dBFS. A real electric guitar DI, especially a low output single coil, typically has a noise floor much higher than that, often around -70 to -80 dBFS once pickup noise, hum, cables, and EMI are included. That means the guitar is already 30 to 40 dB noisier than the converter.
When you add digital gain, the relative relationship does not change. The guitar signal and its own noise remain dominant, and the ADC noise stays buried underneath. Digital gain does not reshuffle which noise source is dominant.
The old
record as hot as possible advice made sense with 16 bit converters, early ADCs, and tape workflows. In modern 24 bit systems with roughly 120 dB of real dynamic range, it no longer applies in the same way.
This is not an argument for recording extremely quietly. The sensible modern advice is simply to record at a reasonable level with plenty of headroom and avoid clipping. For guitar DI, peaks around -18 to -12 dBFS are perfectly fine.
Recording hotter than that does not improve sound quality or signal to noise ratio, it just reduces headroom.
If a system is linear and time-invariant, gain multiplies signal and noise equally. Therefore, gain cannot improve the signal-to-noise ratio of the source.