- With the optical cable, the output is digital (the output is the direct stream of digital data send by wifi)
- With the jack cable, the digital data streamed is converted by the chromecast DAC and is send in analogic form.
And no, in Hi Fi, the optical output is not the preferred one. As there is no "loss" of data during the transfer, the optical output can induce some jitter in the signal.
However, as an external HiFi DAC is about 8547932 times better than the chromecast one, it is better to use the toslink output.