First, for those stumbling across this question who don't fully understand what the VRM's job is:
A VRM is a fine-tuned DC to DC power supply for voltage-sensitive electronics like a CPU or GPU. It usually has multiple "phases" that it switches between to ensure that the average voltage output is stable, and so that the components don't have to work for 100% of the time and overheat. (4 phases means each phase is supplying power 25% of the time)
What is the major difference? What are the advantages/inconveniences with having a 'Digital VRM' instead of a 'normal VRM'?
Modern CPUs can decide how much voltage they need to get a certain task done, or to help itself cool off. They tell the VRM to provide a target voltage over a digital connection. This allows the VRM to use a feedback loop so it can control itself based on its own output versus the target output.
On an Analog VRM, the target voltage is compared to the actual voltage in an analog circuit that uses transistors. It is designed to always adjust voltage to make the difference between the two signals be as close to 0 as possible. This is an older/simpler design and works just fine. In fact, analog systems can be very accurate and still show up on "high end" motherboards.
On a Digital VRM, there is a microcontroller that reads all of the voltage values in digital and uses algorithms & math to set the output voltage. Normally using a PID controller. The microcontroller allows the VRM to be "smarter" about how it outputs voltage and may be aware of other conditions in the system to better manage the power.
Generally speaking, analog VRMs respond faster and are cheaper to make.
Digital VRMs are very complex and require a lot of tuning work to make them effective; But if they are designed properly they can do the job well while also providing many extra power management controls or features. (In the BIOS or motherboard software)
In either case, there can be poorly designed VRMs that do not perform well, and really high quality VRMs that can handle extreme overclocking. There is no general answer to which is better.
TL;DR:
- The CPU tells the VRM what voltage to supply.
- An analog VRM uses transistors in specially designed circuits to make the voltage always move towards the requested level.
- A digital VRM uses a microcontroller and algorithms to make the voltage move towards the requested level.
- Either kind can be built poorly, both can be great for overclocking if made well.