What I personally think of दत्तात्रेय अवतार of विष्णु,

It sowed the seeds of change भारत वर्ष needed during रावण's reign.
On the basis of मत्स्य and ब्रह्म पुराण, he was born prior to परशुराम, when रावण had captured almost every major kingdom
He was Guru of सहस्त्रार्जुन।

He trained सहस्त्रार्जुन, who later defeated, undefeated रावण।

रावण had to enter truce with him. Then सहस्त्रार्जुन captured almost every territory from central to north India.

Later परशुराम killed सहस्त्रार्जुन, and conquered more territory than him.

He even went to southern Regions.

He too was under guidance of दत्तात्रेय as per त्रिपुर रहस्य।

रावण knew an ordinary मनुष्य would kill him. And परशुराम was one who killed सहस्त्रार्जुन.

So रावण's control reduced. And remained limited to दण्डकारण्य region. And वाली was his ally.

This gave chance to वैदिक धर्म to rise again. And by the time दशरथ took to the throne of अयोध्या, it was flourishing.

That's why ब्रह्म पुराण says- for re establishing वैदिक मर्यादा दत्तात्रेय will come.

दत्तात्रेय was born in Gujarat. Saying this on the basis of various locations mentioned in पुराणs.

सहस्त्रार्जुन in महिष्मति, on नर्मदा shores.

परशुराम too on नर्मदा shores.

Most of their works were in western and central India.

Thus दत्तात्रेय अवतार set stage for रामावतार।