Short answer is 'definition'. You are allowing the amp's gain structure to breath and work across the part of the sonic spectrum that it can do what it does easier.
It allows the amp to breath - most plexi type amps (and Fender/Vox also) tend to get all 'clogged up' with humbucker guitars, more so than single coil guitars, and they don't breath. When you do what I do here with a PEQ all I am doing is allowing the amp to not be hit with a lot of lower mid and lows; that allows the amp to be cranked up in the preamp gain so I can ride the volume pot on the guitar to generate a more natural and varied gain structure depending on the moment when I am playing. The lows stay tight, the mids are balanced and the highs don't get shrieky or ice-picky even if they are cranked. If you listen to that clip and look for how the pick attack is working even when I roll off the guitar volume knob... that's the stuff. Then go listen to Angus Young or Alex Lifeson or Brian May and hear how clearly - even over the vastly different styles, tones, guitars, etc - their pick attack is defining WHAT they are playing. That's the key. The gain structure can maxed to make the amp scream; in real life a Plexi or AC-30 cranked up that loud would be completely non practical and thunderously loud. Painfully so. But through the magic that is the current day Fractal box... it's all at your fingers without blowing your ears up. I recorded this at conversation levels and still got exceptional sustain even through my studio monitors. If I was doing this for real with final tracks in mind, I'd crank up the monitors and get the bloom better accentuated.
High gain metal guys use this same strategy and method with different tools - they generally use a Tube Screamer with no gain (but turn up the output level to compensate for shaving the lows) in front of their high gain amp; the reason is to do exactly what I do with this technique. Just using a different tool to achieve the same thing. A PEQ block allows me to taper and surgically do what I want in a more precise and repeatable way. Different application of the concept; but the same thing in the end.