PPPoE and non-ethernet modems

DSL CPE devices aren't simple modems in the same sense as POTS devices. They often have bridging and/or routing capabilities in them in addition to the analog modulating capabilities. A DSL modem providing the phone line to ethernet connection most of the time acts as a bridge. The DSL devices that support PPPoE are also acting, in a fashion, as a router; making the PPPoE connection and providing a bridge to it.

PPPoE is, more or less, a tunnelling protocol. In the same fashion as PPP over a serial link or dial-up.

end-users.

my old 56k dial up modem must have 'supported PPP' in a similar way , done through the OS, you provide a user/pass, it's authenticated and you get a dynamic IP. This router/modem by DLink also has PPP at the OS level not at the hardware level. However, if the feature of supporting PPPoE is a factor that makes the DLink device more than just a modem, then wouldn't the feature of supporting PPP make my old 56k modem more than just a modem?

Yes, its a router that has a DSL modem in it. But that would be lost on 99.9% of the customer base they are looking for, who all refer to it as a modem, so they lose the technical terms that would confuse the end-user. Pretty much any DSL CPE is called a modem no matter what it actually does or how much hardware is actually inside by the end-users.

Pretty easily, its just a protocol, the router just has to talk the right bits for the other end to understand. Doesn't matter if its physically not there, it is virtually in this device.