Direct Optical mode - How to

[alandbush]

And when you're in Direct Optical how do you manage the volume? E.g. I plug a splitter in my TV optical output, then 2 Phantoms. Would the TV control the volume of the Phatoms?

The volume of the optical output is controlled by the device that delivers it.
The TV, in your instance, assuming that it has this feature. Often this output is fixed.

Take a look at some CD players or software players etc. They can offer a fixed or variable output.
If you have a device that has fixed output then another device would be required to be added to the signal path to change the volume of the optical output.

I guess I'm confused with this volume setting 0db that we have to select? And if yes, no more need for a Dialog, right?

Selecting Direct Optical mode enables setting a Phantom to a fixed volume setting that, if chosen to match your other equipment, provides sufficient headroom for volume control.

In my case, I set the fixed volume at the loudest setting I expected to use, knowing that this can be achieved if the volume control is at it highest. I currently listen at 20dB below this loudest setting, increasing the volume dependant on the source and my mood.

The Dialog, if powered on, interferes with the enabling of the Direct Optical mode. It is therefore redundant in this use case.