Unless you're using a
high-resolution portable audio player, the DAC in the stereo is going to be superior to the one in the music player because car stereos have the power and speakers required for bigger, better sound, so the DAC has to be able to reproduce a high-quality signal. Older portable music players and smartphones on the other hand, like the iPod®, were originally designed to make small earphones sound pretty good.
When you use your music player's headphone jack to connect to your stereo, that means you're using the music player's DAC.
A direct connection via USB will yield the best sound quality because it eliminates extra manipulations of the audio signal. Bluetooth streaming runs a close second, because it does manipulate the signal by broadcasting it over the air. It uses techniques that ensure high-quality delivery of the signal to your car stereo, such as aptX® technology (find out about the improved sound of aptX).
An auxiliary input is the next best option. It's also one of the most common and easiest methods to use.
FM adapters offer lower sound quality and are open to outside interference. Cassette adapters tend toward the lowest sound quality, with better cassette performances on the upper end of that 50-70 dB signal-to-noise ratio.
The quality of the source does matter
In this article, we examined ways to get the best ways to get your music to your car stereo in terms of sound quality. However, something to think about is how you encode your music to digital files. Music with less compression (CDs, high-res digital music, etc.) will sound better than music that's heavily compressed (MP3's, Internet radio stations, etc.). If you're ripping a CD to a digital file, you can set the encoding for less compression on many programs, like Windows Media Player® and iTunes®. Likewise, Internet radio stations often let you set a higher quality for your music in the settings menu.
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when somebody asks you what song you're playing 
Answer the phone playa.
