I'm not sure how accurate that is. Here's Cliff's original description: "Added “Gain Enhancer” mode to Amp block Output Compressor. This mode can be used to simulate the acoustic reinforcement of a loud amp coupling into the guitar and enhancing the output signal."
No, it does work that way. Just as real life acoustic coupling does.
It takes some output signal and feeds it back into the input, increasing the input gain (in the real world it would be the speaker output exciting the strings). But it only happens above an adjustable threshold so when the signal is lower (guitar volume turned town, picking lightly) no signal is routed back to the input so no gain boost.
To set it up for the clean to mean thing start with the Out Comp Threshold and set it so that it’s in between your light and heavy sound so when you’re playing lightly or you turn the guitar volume down it isn’t active, but when it’s turned up it is (as shown on the Gain meter). Then set the Out Compression level, which is now not compression but a gain control that works above your threshold, so it controls how much extra gain you get when it’s active. Finally you might find you need to turn the amp gain down to compensate for the input boost you’ve just added, this will also make the cleaner sounds cleaner.
Note: I’m away from my AxeFX at the moment so some of the names might be inaccurate. I’ll check and correct later. [Edit: updated with names as per Axe Edit]