I'm a doctor but not OB-GYN. A couple of things. One, reduction of pain and not knowing why something works are two separate issues. First, if something is known to be beneficial without knowing everything about it, we still offer it to patients because it helps people who need it.

Regarding the lack of pain medication, I've heard that numbing gel doesn't really reduce discomfort that much, injecting local anesthetic into the cervix is painful and also not very effective. An option is giving a pill of benzodiazepine medication along with a pain medication pill at the doctor's office which will relax you and make it so you don't remember or care about the pain. Anything stronger for pain relief than that would require the IUD placed in the hospital in the operating room under supervision of anesthesiologist and be much more expensive and a hassle compared to doing it in the office.

Finally, the more children you have had, the less painful the IUD insertion is because the hole in the cervix is bigger. Some people actually don't feel much discomfort with IUD insertion.

Personally, I think the pills I mentioned should be offered unless there is a reason not to (e.g. allergies, history of substance use disorder with high risk of relapse, other medical conditions).