I think I figured it out the DE0 board has nothing to do with ADV7123 DAC. I don't know why it is showed as a reference in manual. My experiments showed that four bit resistor network simply produce different voltage levels for each rgb signal. For example with vga_R3 pin as MSB, "0000" red signal will produce blank and "1111" red signal will produce the brightest red pattern. So each 4 bit resistor network helps the user to produce 16 different tones of a color.
I just have figured out that from experiments so I have to study more about this multiple bit color subject. Please share any references that you know about this subject.
thanks,
isumairu