Hi
This HT bypass thing is straight from the HEA concept of "Signal Purity". IN that view you use an higher quality preamp when you play music.
It works that way:
Sources (audiophile DAC, and audiophile analog such as R2R, Audiophile Vinyl and the not so audiophiles AVR, front channels signal) ----->2-Channel-Preamp------> Amps-----> L + R Front speakers
The preamp controls the SPL and the choice only for pure , unadulterred music . "Pure" signal chain with audiophile cables to link the preamp to the amps, if you are a real audiophile, you would have monoblocks, thus more cables, thus more signal purity
...
Now if for some reason you would need to listen to lowly sound (not music per se) coming from movies or other video or god forbid gaming... then you need an AVR, with all the signal impure DSP and codecs ... You can use the front channel system (the preamp, monoblocks and great sounding cables) but you hit a problem, since the volume level of the front channel is controlled by the preamp ...The solution, the MAGIC solution? !!! The "HT Bypass switch" that basically removes the volume control from the preamp by changing the preamp to a simple unity gain, transparent device
, its volume is not in use, what comes in comes out, untouched, 
... So the AVR is used like any normal videophile (as opposed to real audiophile) would use it to watch movies and, (god forbid
) play games in some kind of fake, gimmick-y surround.
You get the best of world...
. The AVR is turned off for music listening, it is only used for the times when you are forced to listen to low quality sounds (definitely digital) coming from video features things like movies , series , documentaries, and (god forbid) gaming. 
...
...

This silliness is carried over in AVR as well, you often find in many models (mine, the Denon X-3400 has it) a "pure" mode that bypass any DSP processing, sending the "pure" signal to the "pure" speakers untouched by the dreaded DSP
Peace.
This HT bypass thing is straight from the HEA concept of "Signal Purity". IN that view you use an higher quality preamp when you play music.
It works that way:
Sources (audiophile DAC, and audiophile analog such as R2R, Audiophile Vinyl and the not so audiophiles AVR, front channels signal) ----->2-Channel-Preamp------> Amps-----> L + R Front speakers
The preamp controls the SPL and the choice only for pure , unadulterred music . "Pure" signal chain with audiophile cables to link the preamp to the amps, if you are a real audiophile, you would have monoblocks, thus more cables, thus more signal purity
...Now if for some reason you would need to listen to lowly sound (not music per se) coming from movies or other video or god forbid gaming... then you need an AVR, with all the signal impure DSP and codecs ... You can use the front channel system (the preamp, monoblocks and great sounding cables) but you hit a problem, since the volume level of the front channel is controlled by the preamp ...The solution, the MAGIC solution? !!! The "HT Bypass switch" that basically removes the volume control from the preamp by changing the preamp to a simple unity gain, transparent device

... So the AVR is used like any normal videophile (as opposed to real audiophile) would use it to watch movies and, (god forbid You get the best of world...
...
...
This silliness is carried over in AVR as well, you often find in many models (mine, the Denon X-3400 has it) a "pure" mode that bypass any DSP processing, sending the "pure" signal to the "pure" speakers untouched by the dreaded DSP
Peace.