A comprehensive study of optical spectrophotometry of DAO white dwarfs is presented. A detailed analysis of the He II lambda4686 line profiles demonstrates conclusively that the chemical composition in the atmospheres of DAO stars is not stratified, except perhaps in one object (PG 1305-017). On the other hand, line profiles calculated from models with homogeneous compositions are in excellent agreement with the observed profiles. This result indicates that the helium abundance distribution, in the line-forming region, is homogeneous and implies, in turn, that some physical mechanism is competing with gravitational settling to support helium in these layers. A similar analysis is then carried out for a sample of hot DA stars. In particular, the sensitivity of the atmospheric parameter determination to the presence of unobservable traces of helium in the photosphere is investigated in detail. The results show that, above approximately 40,000 K, the effective temperatures of DA stars can be overestimated by up to several thousand degrees if spectroscopically invisible traces of helium [N(He)/N(H) less than or similar to 10(-4)] are present in their atmospheres. For instance, the optically determined effective temperature of a DA white dwarf with T(eff) = 60,000 K and N(He)/N(H) = 10(-4) would be overestimated by approximately 20,000 K if analyzed with pure hydrogen model atmospheres. In the light of these findings, we present a critical analysis of past and current studies of extreme ultraviolet and X-ray observations of hot DA stars. A comparison of the atmospheric parameters of the hot DA stars with those of the DAO stars reveals that the presence of helium in most DAO white dwarfs is directly related to their unusually low surface gravities (log g less than or similar to 7.5), although several exceptions are found and considered individually. The nature and evolution of DAO white dwarfs is discussed at length. We identify several subclasses of DAO stars, a result which indicates that the DAO spectral class is a rather inhomogeneous collection of objects, with only a few DAO stars in our sample being consistent with post-asymptotic giant branch evolution. We present supporting evidence that the progenitors of most DAO stars are post-extended horizontal branch stars (M approximately 0.48 M.) which have evolved directly from the extended horizontal branch to the white dwarf state. Those DAO stars which are members of white dwarf + M dwarf composite systems represent an independent subclass with unique proper-ties. PG 1305 - 017 is the only DAO star that shows evidence for stratification, while the variable spectrum of PG 1210 + 533 cannot be reproduced successfully with any of the models explored in this analysis. Finally, we offer observational evidence that the presence of heavy elements is the most plausible explanation for the origin of the so-called Bahner-line problem in DAO stars.