Windows 2000/XP uses the graphical device interface (GDI) component of the operating system to handle print functions. Although you can use an external printer language such as PostScript, most installs use the native Windows driver and let Windows do the processing. GDI uses the CPU rather than the printer to process the print job and then sends the completed job to the printer. When you print a letter with TrueType fonts in Windows, GDI processes the print job and sends bitmapped images of each page to the pronter. The printer sees a page of TrueType text as a picture, not as text. As long as the printer has a capable raster image processor and enough RAM, there is no need to worry about printer languages.
Windows Vista/7 support GDI printing, but they also include a new printer subsystem called CML paper Specification (XPS) print path. XPS provides several improvements over GDI, including enhanced color management and better print layout fidelity. The XPS print path requires a driver that supports XPS. Some printers natively support XPS, eliminatiing the requirement that the output be converted to a device specific printer control language before printing.
To answer your other question, there is no digital to analog conversion. The process stays digital the entire time.