S meter noise goes down with ANT preamp increase

Essentially Yes.  ... at least until you get to the point that the internal receiver/preamp noise is lower than the antenna/band noise.  Then any additional preamp gain will not be productive.  You can tell by two means:

1) if your background noise on a band rises when you connect the antenna, then you don't need any more gain.

or

2) if your noise floor doesn't go down a little when you bump the preamp gain another notch, then you don't need the additional gain.

Having too much preamp gain gets you nothing except reduced dynamic range.

I don't need any except for 10 dB on 10 meters, and 20 dB on 6 meters.  Sometimes, on a really quiet 12 Meters, I may add 10 dB.  and if I am using a low gain receive loop on 80/160, then I may add some more gain to raise signal levels.

Ken - NM9P

Here is Tim's explanation:

https://helpdesk.flexradio.com/hc/en-us/articles/204923669-How-to-determine-the-amount-of-RF-Preamp-...

Howard

“So, preamp in reduces noise contributed from the rest of the radio.”

That’s my understanding also.  At “low band” frequencies, atmospheric (or “antenna”) noise is predominant.  At higher frequencies, the radio’s internally generated noise is of greater importance compared to external noise.  Each radio stage passes along the previous stages’ noise and adds its own.  Therefore, if the first stage is a “low noise” amplifier stage, it amplifies the signal with less of its own noise for succeeding stages to amplify and pass along in turn.  As frequency is increased, “antenna noise” decreases, and radio noise (and therefore the preamp’s utility) assumes more importance. 

Howard

I must use every button. Resistance is futile.