Read https://people.xiph.org/~xiphmont/demo/neil-young.html … (grep for 120dB if you must). In practice, 16 bits is more than enough for any practical situation.
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Fs only needs to be strictly above 2*Nyquist for whatever you want to encode. Oversampling is a practical requirement for ADCs and DACs as an *implementation detail*. The end result is still a black box that takes analog in and spits 48kHz out.
The fact that the *practical* way to make a near-ideal ADC or DAC is by resampling/filtering digitally first is irrelevant. That does not change the fact that 44.1kHz/48kHz digital audio is and always will be sufficient to encode all the information.
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This has nothing to do with dynamic range. Dithering is required in order to have *consistent* quantization noise (a flat white noise floor) and to be able to encode the content with zero distortion. Dithering per se is not a perceptual hack.
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Our perception of audio is in the frequency domain, not the time domain. This means that even though, say, a 1kHz tone at -100dB is *below* the broadband noise floor of 96dB, it is *above* the noise floor in a narrow band around its frequency.
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