Originally Posted by TheOxRocks
Or did I just ask one of the all-time dumb questions?
No you did not. Common question.
There are two reasons to use an effects loop. One, they generally put out "line level" signal, which is hotter than "instrument level signal". In general, pedals are designed to work best with instrument level signal, where rack effects are designed for line level.
Two, using an effects loop means that now your effects are after your preamp. If you use the preamp stage of your amplifier to get an overdriven sound, any effects pedals you're using end up before
your overdrive. If you wanted to add, say, a modulation effect after
the overdriven preamp, you'd need to put it in the effects loop.