It is worth considering why this is commonly "taught".
The aim of any circuit is for the aircraft to form an orderly procession in both pattern and height. This increases the chances of everyone being able to work out who is in the circuit. It also reduces the chances of other aircraft "appearing" above or below you.
Of course as with any "rule of thumb" and as others have said it does need to be modified to take into account aircraft performance and weather conditions. However the fundamental objective does not change. The safest position in any circuit is forming an orderly procession!