It seems to me to be the most often recommended method to get a "proper metal tone". Why is that? Why pay so much for a monster and then use the crunch channel and a tubescreamer?
Overdrive pedals like the tube screamer have a boost to the mid frequencies. When you turn up the output of the O/D pedal in the amp, the middle frequencies get more distorted, while the bass and highs are left more clean. This keeps the bass sound tight, which is essential for fast metal rhythms, and helps the guitars be heard over the low end of double kicks and bass guitar.
There are actually as many "metal" tones as there are metal guitarists.
Some of the best metal guitarists in the world use no effects, but simply crank up their Marshall. Others will run a fuzz into a metal distortion then a high gain pre-amp stage, and boosted into distortion within the power amp stage. Still others will run parallel signal paths through different distortions, amps and cabs.
So while some guitarists do as you describe, far more actually do not.
But in any case, metal is about distortion, so any technique which distorts the signal in a way you like is appropriate.
You'll find, if you look at pricing, that the amps that actually tend to cost the most are not the high gain, distorting amps, but the more classic valve amps - because the distortion type they create is more controllable and has a wider range of available sounds. Typical amps sold with the tag "Metal" tend to be cheaper.
Distortion comes from the circuit 'clipping' the signal, changing the shape of the waveform and adding extra harmonic content to the signal.
It's often preferred to go through multiple stages of gentler clipping, so that each stage 'rounds off' the signal a little more, as this allows the player to control the amount of distortion in a more graduated and controllable way by playing harder. It also allows the sound to evolve in a more interesting way as the note decays.
As to why you'd pay for an amp that provides more distortion than you need - it's probably partly just because big amps tend to have more facilities, and it's common for a given player not to need them all.
You can often distort the first gain section of a tube amp with a higher amplitude signal. It's not just solid state distortion you're adding to the sound, but additional tube distortion when you use a higher signal.
Additionally, nearly every popular "metal" tube amp puts the tone stack after the preamp, or late in the preamp, so it goes without saying that bass is controlled after the distortion has occurred. To compound things further, nearly ever stage is set with what is effectively multiple high pass filters on both the cathode and plates of the voltage gain sections. Most tube amps are generally cascaded band pass filters, with the tone stacks having a relatively hard mid-cut even when dialed at noon to even things out. In shortened terms, tube screamers live up to their name.
While there is no 100% answer here, the common advice I see is to use an overdrive to compress and boost the signal so that the pre-amp stage of the amp can more effectively distort the signal.
In this configuration you would dial the Drive setting of a TubeScreamer (for example) to near zero, Tone at whatever you want, and the Level to a very high setting.
For me it was all about the tone. The over drive, distortion had more or less clarity depending on the amps used in conjunction with certain pedals. Each set-up is determined by the guitarist ear, what he/she prefers.
I, coming from 90s metal in SD and LA would use a TS9 tubescreamer (the older models) to add a certain tone to the crunch as it were, shaping the muted tones or post sounds. 60% drive 70% dis 40% tone