I think it has to do with the fact that no matter what position the horse puts his head in, the elbow to bit to mouth line of the rein can be maintained, and because the ring rotates, it does this without changing the orientation of the bit itself inside the mouth. If you pull really upward on a D ring, eventualy the rein hits the end of it's ability to slide upward, then it applies upward pressure on the moutpiece part of the pit, changing the way it lies in the horse's mouth.
A loose ring would just rotate and kind of slip out of the pull. OF course, in extremes , you can pull the bit into all kinds of wierd postions.
There is just something about a loose ring that allows one to better feel the horse's contact with the bit, even at the tiniest amounts of pressure.