Why do I have to do it this way?
Back in the day, a couple of Russian guys got together over a beer and decided it should be that way.

When am I supposed to use this?
Hmmm. What about the "when" part is not clear? Does the book provide examples?

How do I know that I'm referring to an indirect object and not a direct object?
If this is an issue, you may want to look into "English Grammar for Learners of Russian." I've heard it's rather good.

From looking over contemporary textbooks, especially those at the college level, it seems that they throw the cases at you right from the beginning.
I have no idea why this is the case, but it seems to me that the textbooks now are written much worse than the textbooks written about 40-50 years ago. I have Russian textbooks from the 60s which explain things rather well(and I don't mean the ALP ones). But I've seen some of the new language textbooks and they seem to be absolute nonsense, cluttered up with photos and "tip boxes" and other miscellaneous whatnot. I think the main problem with modern textbooks is that they're cluttered up with too much extraneous information and are not written particularly well.