Chuckles wrote:It may be true... Then again, it may just be a rumor.

that made me chuckle
I would say that either of your descriptions are plausible. You could
a) Create different moods or feeling of tension and release within a jam or
b) Establish harmonic and melodic relationships between chords, scale degrees and even other keys, and so on.
Try playing a progression that places a lot of emphasis on the V, so for instance, something in the key of G that has a lot of Dmaj or D7 in it. Now you can add melodic phrases or "solo" with the progression,
in D Mixolydian. Its the same notes as the key of G, but its emphasizing the feeling of the V (which is really just a major scale with flatted seventh).