The 4 bit D to A converter consists of four resistors, whose values are in the ratios shown in the left hand diagram above. They can go high or low, as shown in the right diagram.
The voltage out is determined by which of A B C D are high and which are low.
The resistors are usually not "hard wired" high or low as shown, but taken high or low by signal voltages.
The digital signals at A B C D can be between 0000 and 1111, which gives 16 steps, suitable for a volume control etc.