Hey @aewshopping
The “correct” way is that which you need/want to implement. [Support Guide] Should I use Netlify to manage my DNS? goes into why you would/wouldn’t use Netlify DNS.
Using Netlify DNS is method 2 as described in this documentation. Method 1 is using external DNS as described in this documentation.
In Method 1, all DNS remains with Namecheap (or other provider). If you need to add, remove, edit a DNS record for a domain (A, CNAME, MX, TXT…) you need to it there.
In Method 2, all DNS is handled by Netlify. If you need to add, remove, edit a DNS record for a domain, you need to do that in Netlify. Using this method (as you discovered) will remove (or at least disable) all DNS entries with the domain provider.
One issue people often face when transferring to Netlify DNS is email, 1) because Netlify don’t offer email and/or 2) because email is often configured with another provider (e.g. Zoho, Outloook) and the MX records configured for domain aren’t copied to Netlify DNS prior to making a switch. For reference, see this guide.
If you have other Domain issues also check out [Support Guide] Compiled resources for custom domains on Netlify and DNS settings -- start here!.
Hopefully this has explained things a little for you. If you have an questions, don’t hesitate to reply.