This year I was able to pick up the pass at the agent's office in Hong Kong, but previously they have been sent by international courier - which certainly is expensive - and I suppose that's still the only option in many countries.
That used to be possible here too until the local Visit Britain tourist office closed, they could print the tickets out themselves there and then. No need to order in advance, very useful.
I suppose the pass would still have to be validated at a ticket office (which is where they always check your passport) so what's the advantage of getting it issued by a machine (rather than just printed in the ticket office)?
No extra validation would be required if it came from a TVM, it would be on standard credit-card size ticket stock printed with start + end dates (and date boxes possibly on a second ticket for flexi-passes) as the machines only have a printer for standard magstripe card stock not the large paper tickets currently used for Britrail.
This is what was available until about 5 years ago if you bought from an agent who didn't issue the tickets themselves, they issued a voucher that needed to be exchanged at a ticket office who printed the Britrail pass on regular stock.
As far as I know this method of issue is currently not used, I don't know of any existing seller that would issue such vouchers and from previous threads I don't believe Britrail issue is possible on current ticket office systems.
The main benefit, for me anyway, would be the easier to carry ticket. There is also the slight chance that it would work ticket barriers but experience of All Line Rovers suggests probably not.