A lot of enlargers have a filter drawer over the condensers so they're out of the image forming part of the light path. In theory that's better for sharpness. Also, in theory, delicate easily scratched gelatin filters don't degrade the image. Plastic ones do. Back to practical reality!
Using a holder below the lens lets you buy a set of fairly small filters. You can often pick up a set for very little money second hand, a few dollars perhaps. Several brands are/were available and they all work the same way so you don't have to use Ilford filters only with Ilford paper. Kodak Polycontrast is likely the most common. Ansco briefly made some. DuPont, who came out with the first variable contrast paper, Varigam, made Varigam filters. Later when they introduced Varilour they came out with Varilour filters.
Ilford filters are available in half grades, plus they make a #00 (double zero) ultra low contrast. The DuPont Varilour filters incorporate a bit of neutral density. Find the correct exposure for the lighter middle tones and you can increase or decrease contrast without changing exposure time EXCEPT that the #4 requires twice the exposure. Hit the button on the Time-O-Lite twice so you don't jiggle anything out of place while changing f-stops.
The biggest advantage of a below the lens arrangement is the ease of switching filters while making a print without disturbing anything. You can, for instance, make an overall 12 second exposure through a #2, then give it 3 seconds through the #4 to "punch up" the blacks without affecting much else, then burn in some bright areas through a low contrast filter to get a hint of tone. Some people like the effect of giving part of the exposure through a #4 and part through a #1, doing a bit of burning and dodging in each exposure, but not in the same places. No exposure at all is made through the "normal" #2. See, it's just as versatile (and complicated) as Photoshop and your hands get to smell like hypo (but there's no dirt under your fingernails). And you end up with a gorgeous gelatin silver print!
If the under the lens filter degrades the image I've yet to notice it.
http://thepriceofsilver.blogspot.com/