Well, I think in either case the goal is to lose fat while maintaining muscle. So both method would benefit from a clear picture of an uninflated LBM reading. As your weight can fluctuate UP each week via any of the issues I already mentioned, you can only go DOWN so much. Hence the rationale for tracking the weekly low reading.
Imagine someone cutting, not prepping, and weighing themselves on a morning following a day when they just happened to ingest a lot of fiber, as well as eating later in the evening. Their morning weight would register higher than it might have had they had more time to 'vacate' as well as metabolize a bit. Failing to consider this, they think that they not only didn't lose any weight the past week, but they actually gained a couple of pounds. See how this can be problematic?