The FireTV converts the dts audio.
The target audio format depends on the audio configuration of the FireTV device and what is supported by the attached TV/receiver/etc.
The conversion does not occur on the Plex Media Server, so it reports everything as direct play.
What is shown in the Plex Dashboard (direct play/direct stream/transcode) tells you what is happening on the Plex Media Server. There is no feedback from the client to the server. The client can change the audio or video and the Plex Server will not be aware it is happening.
If the conversion is performed by the device, not the Plex client, then the Plex client may not be aware of what is happening.
Regarding subtitles: Plex for Android v8.0.0 & higher direct plays subtitles, even if audio or video is transcoding. Announcement
