The output transformer provides a full galvanic isolation between the Raspberry Pi and your DAC on the electrical output. Usual consumer-grade SPDIF outputs do not use output transformers. Usually this works without problems. However, many audio enthusiast like to use this option. If you’re not sure, the standard version is most likely ok for you.
Note that the output transformer is shielded. To make sure the shielding works, your DAC needs to be grounded. If you’re unsure, we recommend the standard version.
The output transformer does not have any effect on the optical output. Therefore if you plan to use only the optical output, the standard version will do the job.