This feature ensures the NW-ZX707 can transform standard MP3 or PCM audio to the ultra-high frequency 11.2 Mhz DSD audio stream.
I think the article is just incorrect. Sony probably means it can just decide .dsf files. And you are confusing 1 bit DSD with 16 bit PCM. The most common DSD format is DSD64 2.8Mhz which is equivalent to 16 bit /176khz, 24 bit/117khz, or 32 bit/ 88.2khz. And the microphones and instruments do work at these high frequencies.