I think the problem here is a kind of peer pressure among parents who are trying very hard not to be "uncool". They buy into the (false) narrative that all teenagers drink and experiment with drugs etc, and convince themselves that it's better to "control" this behaviour by supplying the alcohol, because the kids will inevitably find a way of doing it behind their backs otherwise. Of course, that's a myth because they will have no more control over what their kids are doing than any other parent - the alcohol that they have provided could easily be mixed with something else procured by other means.
At the heart of it, I suspect there is a deep-rooted insecurity. A fear of not fitting in that perhaps goes back to their own teenage years, which they are now projecting onto their teenage children. It would be so much better if they could teach their kids that blind conformity isn't actually necessary in order to fit in, but maybe they don't have the confidence (in themselves? in their kids?) to take that risk.
In most cases, there probably won't be any permanent damage done, but the research does indicate that this kind of approach can increase the risk of alcohol abuse in the future, and the kids are also putting themselves in potentially vulnerable situations in the present.
The bigger risk, though, in my view, is the message that this kind of parenting sends to the kids about what you have to do to fit in. Unhealthy, illegal, risky behaviours are justified by the fact that they enable the child to conform to the crowd, and the child learns that, sometimes, this is just what you have to do in order to be acceptable to others. That's not the message that I want to send to my child at all.