Pricking out, potting on? Benefits?

I was watching a Charles Dowding video on growing lettuce and he demonstrated pricking out.
Pricking out seems to be be sowing in clumps and  then carefully moving individual seedlings into cells.
Further investigation led me to the term potting on.
I think potting on is moving seedlings from cells to larger pots so they can get bigger before planting out.

This seems like a lot of work.
Why not sow directly into the final container and grow seedings until they are ready to go out?
Whats with all the transfers?

Sure, at eary stages it takes up less space, but your gonna end up using that space anyway.

What am I not getting?

it’s hard to get little seeds like lettuce separated out to plant separately, and growing too close together leads to more competition and potentially some stunting because of it. that’s the main reason i’ve seen for seeding tight and pricking out to cells or something bigger. if timing is such that you can go straight from whatever you seed in to the ground, or cutting out the next potting-up stage by planting out, or pricking out into larger pots, that can save steps, and as you say, if you have some good way to seed singly in bigger pots, that could do it too...

i feel like doing all those steps you mention is kind of the standard greenhouse-y keep-pushing we-have-plenty-of-labor-employed-here way, but it can be streamlined some. i definitely do some version of various of those steps at times. cold-stratify a bunch of seeds in one pot for ease of seeding and minimizing the containers to deal with over the winter (or in the fridge), and then pricking individuals out into pots before they start fighting with each other much? i do that. truly tiny seeds like chamomile, etc, are almost impossible to seed separately...that kind of thing.

I also have been exploring this. I am by no means an expert but here is what I have learned so far:
depending on what the final destination is like, some plants might not survive planting out or even sowing in place. My soil is heavy clay with a lot of rocks and SWARMS of snails/slugs when it rains. Unless it's beans or something that "is born strong" it's going to struggle. I plant the seeds in trays to give them a chance to get stronger before I put them out.
Other plants hate to be disturbed, so I might plant them in place but take measures to protect them (collars, for example, with squash or zucchini).

I think Dowding has such fast turnover in his gardens (from the videos I've seen) that he wants to have a plant ready to plug into a spot he's just harvested.

It's mainly a space issue, he keeps his seeds on a hotbed, there is very limited space there so they need to be sown close together. We do a similar thing, tomatoes are sown close together and potted on, when I sow them they need lights and heat, by the time they are ready for potting on they only need light, so by starting them close together I do not need to heat such a large area as I would if they were in larger pots to begin with.  There is also a school of thought that says if you start a plant in to big a pot (or pot up into a much larger pot) the roots will not fill the soil but will just rush to the bottom and then curl around.

Thanks for the thoughtful replies!
Not needing bottom heat after sprout makes sense.
I think I'll probably over seed and thin , at least with salad and root crops.
I'm going to try winter sowing them anyway, no artificial heat or light.
Really, its close to sowing into the bed itself, but the seed gets protection from pests and thermal extremes.

Peppers and(if I start them inside)tomatoes might get  careful treatment, including bottom heat, and might even be potted on.

Yeah, I understand it as being a space issue. If space is your limiting factor, then having seedlings crowded together at their given stages allows dozens or even hundreds of times as many plants in the same space. I did see Dowding say this in one of the videos. And if seeds mostly need heat, and seedlings especially need light, and the locations of those are limited, that's a big reason. And then as mentioned above, Dowding is always "popping" some seedlings into a little row in between something else that yesterday made space due to harvest or culling. And I think he says he grows extra seedlings so there are always replacements in case of failure, and choices of what to pop into spaces that open up.

I don't have much of a space problem, so for things that kind of need more care or heat or time than direct seeding can give, I usually seed into small pots (leftover food containers or milk tetrapaks) that I intend to keep the seedlings in until they are planted out to the garden. If I ever manage to make a lot more growing space in my outdoor garden I might have to optimise the seed starting space in windows and greenhouse and start the multiple potting up process , but so far I haven't come close to that limit.

I do this with most of my seedlings;  I can't direct seed most of the time because the slugs and bugs massacre them and sowing a bunch at once into one tray saves me time and space.  I generally will just prick out into a similar seed tray, spaced evenly, and then plant out from that tray once big enough.   I've noticed that my pricked out seedlings grow larger than ones grown directly in modules, which I now no longer use.

I spent 21 years working in greenhouses.  Everything was seeded into seed flats then “ potted on” as you are saying.  But the potting on happened when the root system had filled the smaller container or had developed a strong white root system to be “ potted up.”

Planting 1 seed in a big pot leads to a lot of problems for most growers.  

Lots of top growth before the root system has developed. No body wants to pinch back a beautiful plant!

Overwatering.

Damping off.

Of course there are a lot of plants/ crops that are direct seeded. But the theory still works.  Plants need to be strongly established with good strong root systems before they are thinned.

Then I take out all those cute little strong seedlings and stir fry them!