This feature ensures the NW-ZX707 can transform standard MP3 or PCM audio to the ultra-high frequency 11.2 Mhz DSD audio stream.
I think the article is just incorrect. Sony probably means it can just decide .dsf files. And you are confusing 1 bit DSD with 16 bit PCM. The most common DSD format is DSD64 2.8Mhz which is equivalent to 16 bit /176khz, 24 bit/117khz, or 32 bit/ 88.2khz. And the microphones and instruments do work at these high frequencies.
No, the product page mentions the “DSD Remastering Engine”, which says the same thing as the article. They probably just mean they’re using a 1-bit DAC, and are trying to pass that off as a selling point. Although the article did lose the “1-bit” part.