Is audio better through USB or optical?
Both will work fine, but optical has some major benefits over USB that just pushes it into first place. Not being affected by electrical and radio interference is a major advantage to me in the audio world. Personally I always use optical audio when possible.
Can optical cable be used for audio?
Both HDMI and optical pass digital audio from one device to another. Both are better than analog (the red and white cables). Both can pass multi-channel audio, like Dolby Digital.