yep, it slows the cooling of the spine of the blade just enough so that it doesn't convert totally to pearlite or martensite.. cant remember which. Its all about grain structure, and the quicker the steel is cooled, the harder the edge will be (in phases).
The reason behind it is traditionally, japanese blades were made from tamehagani which was smelted in a tartari furnace from iron sand.. THere was silica in the steel, and the skilled smiths were adept at controlling the structure of the steel, and getting it fairly homogenous, but their only quenching medium was water (for the most part) and they tried to get the hardest possible edge.. which involved sacraficing much of its resilience.. so they began claycoating to keep a soft steel back, so even if the blade did crack it would be held together and be serviceable anyway.. but hopefully it would be strong enough so that it doesn't end up cracking anyway.
and btw.. something interesting... the blades never ever touched another sword unless accidently.. Samuri were proud of their blades, and a nick was the equivilant of a major wound..
wow, got a little bit off topic
I do it because its pretty..