So would all adapters have to be that huge if they need to include the DAC? If so, I think it might be easier to just stick with lightning headphones and get a lightning to 3.5mm adapter. Obviously the best scenario would be no adaptors...
No. You can build a DAC into something much smaller (i.e. built into the connector), but the components (and therefore conversion quality) likely won't be as good.
The way I see it is this: when you think about "the future", does that future include listening to music over wired headphones connected via an analog 3.5mm jack? To me, it absolutely doesn't.
Over the last decade or so, we've seen leaps and bounds in processor speed, graphics, video resolution, battery life...but audio quality always seems to get overlooked. We have gorgeous HD and 4K video, but Apple Music still streams at 256kbps (for now, at least. I think this will change soon).
Why is everyone so attached to the 3.5mm jack? Decent bluetooth headphones are basically a dime a dozen and untether you from wires, and far superior quality can be had using an external DAC and digital connection; so there you satisfy people who want convenience, and people who want quality. And you know it won't be long until there are wireless headphones with phenomenal DACs built right in, if there aren't already.
I'll admit that an adapter surely isn't the most elegant solution, and I acknowledge that lightning headphones are kind of dumb because you can't use them with other devices (should have gone with USB-C), but I'll happily use an adapter with my M50x's if it means I get better D to A conversion. If you haven't had the chance to listen to a great DAC and compare it to your phone's headphone jack, do yourself a favor.
Yes, it might inconvenience you for a couple of weeks, but everybody here knows that the headphone jack is going away EVENTUALLY, and if it wasn't now, then people would still be up in arms about it if it were next year or five years from now.
/rant