The cooler, one just bigger than the meat, although towels or blankets taking up space around foiled meat is fine, has multiple functions. It is better to serve hot meat without having to reheat. Resting meat helps retain moisture. Cooler resting allows additional time at temps above 160°F for additional connective tissue breakdown giving a very tender fall apart Butt. Cooler resting lets you get the meat done up to 5 hours early so you can finish setting up for dinner and/or gives time to spend with guests, not standing outside in 10° weather trying to maintain a fire and temp in your smoker. For Safety, it is important to keep meat at or above 140° so if for any reason the cooked meat gets contaminated, folks picking pieces off with dirty fingers, the bacteria can't multiple and make your guests sick.
If everything goes perfect, meat finishes on time, is at the desired IT and tenderness, all the guests are there and seated, the rest of the meal is ready to go to the table and there is nothing to do but pull the meat and serve...Then there is no need to cooler rest. Just set the meat on the counter, rest until cool enough to handle, 30-60 minutes, pull it and serve.
I hope this helps...JJ