the reason most guys do it is to fit the biggest most aggressive offset wheel under a stock fender. by stretching the tire, it pulls the sidewall in a bit giving some extra clearance. however, it's pretty much teh opposite of what you would wan tto do in a performance application. i did it on my lexus for hte very reason i stated and i actually like the look; but it's all in the eye of the beholder.
back in teh early days in europe, there is actually a law stating that the tire cannot poke out farther than the fender. so in order to not break the law but still fit the most aggressive wheels possible, the vw guys would fit a narrower tire on a wide wheel; thereby keeping the tire inside the fender.