First, it provides for the basic need to attenuate the input signal for “hot” or loud sources. For example, there are some microphones out there that generate such a large signal that a pad is required in order to prevent unwanted distortion.
The second reason is for sonic shaping. All LaChapell Audio preamps place the -20dB pad function in such a way that, when engaged, the gain contribution from the input transformer is effectively eliminated. When that loss of gain is made up by dialing in INPUT gain, the user has essentially traded transformer gain with vacuum tube gain. As a result, the distortion is different, the frequency response is different, etc. User who use this this technique express hearing more “air” and “depth” to the sound. It’s not always preferred but it demonstrates the preamps sonic flexibility. A couple areas where this technique is routinely used are drum overheads and stereo piano overheads.