When you have a PHP project where there's a mix of procedural function (the code is at the top and the html at the bottom, so it's easy to split right ? Hum and those includes, what do they do exactly ?), ... classes (We used classes to put our functions in so we do OOP, right ? Err... no) and parts of a heavily customized Wordpress. Plus two-three half started in-code reorg/rewrite that went nowhere because the devs jumped the ship.
You're told you have to I18N the whole spaghetti meatball soup. You try a few weeks and then see you're going nowhere and start to realize that you're doomed to a rewrite. Oh, and you're a team of two. Sometimes you really have to. And migrating data .... such a pain in the ass ! Test encoding I'm looking at you ! At of hand int code (would not call that enum) I'm looking at you too.
But. It's not always the case. And right now I'm starting the reorganize and refactoring a project that was already in a descent shape. And it's much more interesting, less straining and business owner have more visibility on the work done and are happier.
So yes, whenever you can, incremental rewrite is the way to go. But never say never. There are contexts where doing a rewrite is just plain necessary because the code is in such a bad shape you just can't add any feature anymore.