On headphones and home setups digital sounds better.
On power amplified systems, an engineer will route lets say 2k into the high frequency drivers. The human ear perceives high frequencies as being very loud and piercing. Vinyl doesn't do much beyond 13k, so an engineer can amplify the high end accordingly and it will sound nice to the ear. When a digital file is then played, with audio extending up to 20k suddenly theres a lot more signal being routed into the high frequency drivers making it sound much louder - and disproportionately piercing.
Rigs are set up power-wise to make vinyl sound good. Digital has a bigger range, and can end up sounding a bit nasty on a system thats designed to get the best out of vinyl.
And so degrading your digital signal to the same EQ curve as vinyl is a way of getting round a system being setup for a different format that behaves differently.
At a really high end you will get engineers adjusting the EQ settings on the amps to get the best out of whatever signal is being amplified, but most places are just "plug in and go". I think some systems even auto-calibrate based on the response they're getting.
A touch more bass and losing some high end will make digital dj sets sound better I reckon, just can't figure out how to do it.
Grrr to traktors lack of VST support. Grrr.