Fluid antenna system (FAS), which continuously repositions a single physical element across a deployment region $[0, D]$, breaks this limit by freeing antenna positions from the discrete grid entirely. This paper establishes the theoretical foundations of sparse FAS design for direction-of-arrival (DOA) estimation and shows that continuous position freedom unlocks three compounding advantages over the classical designs. \emph{First}, we derive a universal dual DOF bound and prove that FAS-optimized positions can approach it, growing the DOF linearly with $D/λ$ , where $λ$ is the signal wavelength, rather than saturating at $O(N^2)$. \emph{Second}, the CRB scales as $O(1/D^{2L})$ for $L$ sources, a $(D/(N^2 d_0))^{2L}$ improvement over the best grid design, with $d_0 = λ/2$ and D-optimal positions admitting closed-form solution for single sources and efficient Frank-Wolfe algorithm for multiple sources. \emph{Third}, we propose a two-stage FAS-MUSIC approach that combines coarray MUSIC disambiguation with full-aperture local maximum likelihood (ML) refinement to track the CRB, overcoming the grating-lobe ambiguity inherent in large-aperture non-uniform arrays. Robustness to minimum spacing constraints, mutual coupling, and finite position accuracy is also analyzed. Extensive simulations show that FAS-MUSIC achieves $17.5\times$ lower root mean squared error (RMSE) than uniform linear array (ULA) MUSIC and that FAS with $4$ antennas outperforms MRA with $8$ antennas, gains that are unattainable by any grid-constrained design.