It is literally an output that is pre-amp... before the signal is amplified.
So that way, if you wanted to use a receiver to simply decode Dolby Digital, and then pass the individual signals (left, right, center, etc) into your own amplifier, you could do that.
Think of it as a way to bypass the internal amps. The audio signals go through all the processing and whatnot up until the point where it is amplified and sent to the speakers-- and you have some outputs that come right before the amplifier stage which allow you to steal that signal before it is amplified for whatever reason.
The normal reason, as I said above, is to use amps other than the ones built into the receiver (bigger ones, or nicer ones for exmaple).