I've dry lotted horses just fine before as well :) when I first got Sammy he was dry lotted, the last thing I needed was him gorging himself on grass, then going hoof up on me.
Some horses NEED grass--my little MFT colt for instance, he's STILL recovering from being dry lotted at a barn with Loki (who stole all his food and beat him up).
Then then are some horses that NEED to be dry lotted. Theres a pony across the street from me who would greatly benefit from a dirt lot, good hay, and exercise.
Sammy, my ol' rescue, could be easily dry lotted with minimal turnout, he could be more than happy living off two flakes of hay per day and a scoop of grain now that his weight is normal. He gets grain traces now a days (from 10lbs per day to a quarter scoop) he's gotten so fat.
Just depends on the horse. So long as they have quality hay though, pretty much any horse can live comfortably without grass. Since hay, essentially, is grass ;)