It's basically just a place to inject a signal between the preamp and power amp. Some people prefer modulation effects (like flangers, phasers) and especially delays to be AFTER the amp's preamp distortion instead of before it. For example, putting a delay in the loop would make the pedal delay your already distorted signal, where putting it in front you'd be distorting your delay. They do sound different, and what you like best is all up to you.