Background Digital proximity tracing (DPT) aims to complement manual contact tracing (MCT) in identifying exposed contacts and preventing further transmission of SARS-CoV-2 in the population. Although several DPT apps, including SwissCovid, have shown to have promising effects on mitigating the pandemic, several challenges have impeded them from fully achieving the desired results. A key question now relates to how the effectiveness of DPT can be improved, which requires a better understanding of factors influencing its processes. Objective In this study, we aim to provide a detailed examination of the exposure notification (EN) cascade and to evaluate potential contextual influences for successful receipt of an EN and subsequent actions taken by cases and contacts in different exposure settings. Methods We used data from 285 pairs of SARS-CoV-2-infected cases and their contacts within an observational cohort study of cases and contacts identified by MCT and enrolled between August 6, 2020, and January 17, 2021, in the canton of Zurich, Switzerland. We surveyed participants with electronic questionnaires. Data were summarized descriptively and stratified by exposure setting. Results We found that only 79 (58.5%) of 135 contacts using the SwissCovid app whose corresponding cases reported to have triggered the EN also received one. Of these, 18 (22.8%) received the EN before MCT. Compared to those receiving an EN after MCT (61/79, 77.2%), we observed that a higher proportion of contacts receiving an EN before MCT were exposed in nonhousehold settings (11/18, 61.1%, vs 34/61, 55.7%) and their corresponding cases had more frequently reported mild-to-moderate symptoms (14/18, 77.8%, vs 42/61, 68.9%). Of the 18 contacts receiving an EN before MCT, 14 (77.8%) took recommended measures: 12 (66.7%) were tested for SARS-CoV-2, and 7 (38.9%) called the SwissCovid Infoline. In nonhousehold settings, the proportion of contacts taking preventive actions after receiving an EN was higher compared to same-household settings (82%, vs 67%). In addition, 1 (9%) of 11 ENs received in the nonhousehold setting before MCT led to the identification of a SARS-CoV-2-infected case by prompting the contact to get tested. This corresponds to 1 in 85 exposures of a contact to a case in a nonhousehold setting, in which both were app users and the case triggered the EN. Conclusions Our descriptive evaluation of the DPT notification cascade provides further evidence that DPT is an important complementary tool in pandemic mitigation, especially in nonhousehold exposure settings. However, the effect of DPT apps can only be exerted if code generation processes are efficient and exposed contacts are willing to undertake preventive actions. This highlights the need to focus efforts on keeping barriers to efficient code generation as low as possible and promoting not only app adoption but also compliance with the recommended measures upon an EN. Trial Registration International Standard Randomised Controlled Trial Number Registry 14990068; https://doi.org/10.1186/ISRCTN14990068