DACs output analog signals based on digital inputs, and fluctuations in output can indicate issues beyond the DAC itself. The LTC2601 is a precision 16-bit DAC, and if the temperature readings fluctuate by 0.2 degrees Celsius, this may reflect the resolution limit of the system rather than a fault in the DAC. Troubleshooting should include examining the digital input source and ensuring the reference voltage (Vref) is stable, as a poor Vref can lead to inaccurate outputs. Suggestions include using software to verify the values sent to the DAC and possibly implementing a low-pass filter to smooth out the output. Accurate diagnosis requires understanding the entire circuit topology and component interactions.