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Yes, your Arduino has ADC and PWM, but if you need a true analog output, you should add analog capability to your Arduino board with the help of an external DAC. The nifty MCP4725 chip could be a ...
Of course, you could get rid of the nice-sounding DAC chip and output 5-bit PWM directly ... for getting started with your ESP8266 project. Oh wait, you want Arduino IDE support?
But the real question you have to ask is: is it better to use an integrated component or just put an Arduino and ESP8266 together? [Andreas Spiess] not only asked the question, but he answered it ...