A true "classic" signal chain was a guitar plugged straight into an amp with a mic on it and some plate reverb added to it on the mixing board in the studio.
Then in the 50s guitar amp manufacturers realized that they could "model" a studio reverb by using springs inside the guitar amp so guitarist could use reverb in a live setting.
Later on they did things like impeding the travel of the recording tape to create quasi flanging effects, again post-mic.
Multi-head recorders or several recorders ganged together allowed for things like echo, again all post-mic.
In the 1960s and 70s effects pedals started to come on the scene ad these all had to be placed pre-preamp.
So any time-based effects like echo would be distorted by the guitar amp's preamp and power amp unlike the studio effect that the echo pedal was "modeling".
Of course this became a standard too, but that's another story.
Other issues involved the signal path sucking the tone of your guitar out before it even reached the input of your amp due to capacitance effects and bad buffer amp circuits inside the pedals.
Then in the late 70s Mesa came out with the Boogie which featured a circuit for distorting the signal within the preamp of a guitar amp while the power amp stayed nearly perfectly clean.
By the early 80s Mesa realized that if time-based effects (reverb, delay, flange, chorus, etc.) were place between a hi-gain preamp and a clean power amp that certain of the old studio based effects could be modeled and the effects loop was born.
This effects-loop system doesn't work so well with amps where the power amp is being driven into distortion because then those time-based effects are also distorted.
If using a low watt power amp and driving it into clipping was essential to your tone then your only option was to mic your amp in an isolation box (or put a load resistor on your amp along with a slave out circuit and an speaker emulation circuit) and send that signal into your time-based-effects and then fold that back into a clean power amp and then out to some sort of full range speakers.
Of course there were several other flavours of this approach as well, but that gives you the gist of it.
That's a lot of gear to take to the Bar Mitvah gig you were playing that Saturday.
The moral of the story is that the effects loop paradigm only works well with preamp-gain-oriented hi gain amps and kind of sucks for non-master volume oriented hi-ish gain amps.
The H&K Cream Machine was the first guitar preamp device I ever saw that had a little tube power amp that you could push and then slave out to some time-based effects and then monitor with whatever.
But it had no channel switching and was a one-trick pony.
The modelers, like the Line 6 stuff that came out in the 90s, solve all of these issues by simulating the entire signal path, including the power amp distortion, in software .
The disadvantage was that they sounded like shit.
Enter Cliff Chase and the Axe-FX (circa 2005?).
*All* the above problems solved - and guitarists can now easily achieve the true "classic" signal path in a live setting with state of then art tone along the entire signal path whether monitoring through guitar cabs or FRFR cabs.
It might be a nice option to be able to put effects between the Axe's preamp sim and the power amp sim, but I'd probably never use it.
If I want my reverbs and delays and choruses to distort I can always place them in front of the Amp Block.
And as far as placing time-based effects in front of or after the Cab Block is concerned it really doesn't matter although intuitively you'd think it might.
This was one of my first concerns back in 2008 when I bought my Ultra but I was set straight quickly by several forum members including Jay Mitchell.
Search the forum for "LTI" or "Linear Time Invariant".