PJ manual says this:
The height of the ball receiver on the trailer must be adjusted so that the trailer, when loaded to rated capacity, is level while connected to the tow vehicle. A level trailer allows equal weight distribution on the axles.
What sounds reasonable to
me is that (separate from the issue of maintaining equal load distribution to multiple axles) the reason for keeping the tongue level is to prevent uplift on the rear axle of the tow vehicle when stopping.
When you are stopping, the front of the tow vehicle is going down anyway, then couple that with an upward force component from the trailer tongue pointing at the sky and pushing up on the rear axle, and you are reducing stopping power of the rear wheels. Granted, this happens anyway, cannot really be avoided, but upward-sloping trailer tongue makes it worse.
Also, towing with the tongue pointing at the sky makes you look like a newbie
