"I think we all blindly try to add weight without thinking (I'm guilty too)."
Strength is the ability to generate force. TO get stronger, you have to generate as much force as possible. For squats at least, you ability to generate force maximizes at about 6-10 minutes after a heavy set of five.
"Shouldn't one be maximising the benefit of each weight-level before moving on?"
WHen you can get all 5 at a weight, you have maximized the benefit. Doing more sets in less time is not an indication of strength, but of conditioning.