Threat level was important when you had to have a full party of scaled players to farm scaled items.
This means that long time ago you had to have a full party of 21/22s to farm 21 SSC pinks.
A single person over level 22 would make every pink drop be level 25.

They changed it so now you can have a high level and the scaled twink would still get scaled items but the high level would still get level the regular base version of the item.

Threat levels were important to note if you twink farmed.
Nowadays, threat levels do not really matter too much as twink farming has become much simpler.