This is a rule I usually abide by for western games. There are exceptions, such as Doom 2016, Doom Eternal, Halo (except 2), Quake 1, STALKER (hardest difficulty reduces the health of all humans), or Starcraft. For the rule to apply, there need to be at least 2 harder difficulties above normal (Normal/Hard/Hardest applies, Easy/Normal/Hard does not), and the hardest difficulty needs to not be unlockable, or playable through some type of NG+. This rule can apply to some Japanese games too (such as Nier, which has some enemies on hard that regenerate health faster than you can deal damage).
For some examples of games where this is true, we have: Old Doom (Nightmare is a joke difficulty, adding respawning enemies into a game about ammo attrition), Call of Duty (Veteran is bullshit), Titanfall 2, Bioshock Infinite (1999 mode, though honestly hard is still a big annoying jump from normal, and 1999 mode isn’t much harder), God of War (hardest difficulty has enemies engage Devil Trigger for insanely high health, and they can’t be launched anymore), Diablo 3 (Inferno, on release), Torchlight 2, Mass Effect 2 (here is a forum post outright mentioning the rule), Gears of War, Batman Arkham Series (turning off counter indicators is fine, but damage is way too high and enemies have way too much health), Uncharted, Spec Ops: The Line, Serious Sam, System Shock 2, Far Cry, FEAR, and Metro 2033.
Part of the reason to play games is the difficulty, so naturally going for the highest possible difficulty is usually preferred for experienced players. Many western games boost the stats of enemies indiscriminately on harder difficulties, resulting in poor pacing for combat (bullet sponges), even in game genres where this doesn’t really work, such as First Person Shooters, where you can’t really negate damage from enemies like you can in an action game.
Western Gamers love hard difficulty modes in a way that Japanese gamers do not seem to. This interview with Keiji Inafune remarks on that, and we saw it in differences of survey results between eastern and western gamers for Nioh and FFXV. It seems to be the western gamers demanding the hardest difficulty modes, so studios cater to that with a harder than hard difficulty mode that isn’t given a quality pass. As I sometimes say, “Made for no one, tested by no one.”
Boosting stats can be a legitimate way to increase difficulty. Sundowner in Metal Gear Rising is one of the most pitiful bosses in the game, in large part because he has almost no HP. Most players don’t get to see his second form, or if they do, don’t get to see most of the attacks in his second form, because he dies before he gets a chance to show them off. One of my best remembered experiences in Dark Souls was replaying on NG+, and needing to learn a lot more about the patterns of the 4 Kings boss, because I couldn’t breeze through. When enemies have less HP, you can neutralize them before they get a chance to attack you, significantly reducing their challenge.
There is however, a point of diminishing returns. Adding more HP forces you to engage with an enemy for a longer period of time, gives you more chances to make more mistakes, but eventually you’ll “solve” the encounter, and the increased HP stops significantly increasing difficulty, and just makes the fight take longer. More HP can make an enemy with difficult to avoid attacks harder, but once you get used to avoiding these attacks, and work out a pattern, the fight becomes repetitive. This is an issue with pacing. Each enemy and each encounter has a certain amount of readily accessible state space or depth, and holding the player in the encounter longer forces them to traverse more of this state space, which is good. Holding them for too long causes them to exhaust the supply of state space, and they end up cycling through situations they’ve seen before, which is boring. The point of depth is to continue to provide new situations to the player, so naturally, the goal is to pick enough health that they see the enemy’s whole moveset, they see it with the 2 (or more) of them occupying a bunch of different combinations of positions in the arena, and then move on without mulling over it too long (and of course, match the players’ skill level, but really I’m talking about the experts here).
Id Software has done well in their harder difficulties, such as Nightmare in Quake 1, or Ultraviolence in Doom 1, by avoiding numerical buffs to enemy HP, but instead adding more enemies, and repositioning them to trickier spots on the map. Japanese Stylish Action Games, such as Devil May Cry and Bayonetta do similarly on higher difficulties, incorporating late-game enemies sooner, and in higher numbers. The Halo series is well known for its spectacularly well tuned Legendary difficulties (except 2) that buff health, damage, and accuracy sparingly, and also incorporate different compositions of enemies. Simple number buffs are legitimate, but should be carefully considered, and not done to excess.
So yeah, if you’re walking into a Western game that you’re unfamiliar with, and don’t have a good reason to believe the hardest difficulty is well tuned, it’s usually safest to go with the 2nd hardest.