The main thing is it gives the capability to adjust almost every detail, and they have a tendency to become important in embedded applications. To give one extreme example, an embedded intel board had a hardware errata which basically meant a very common sequence of instructions was unreliable, and the workaround involved patching the compiler to avoid emitting it, but then basically everything needed building with the patched compiler. Yocto lets you do that, it's even fairly easy, most traditional distros would struggle (Gentoo and nix are the other options, but I don't know how well they can do cross-compilation, which is also a big part of Yocto).

I think what they mean is, having all the source code that make up your system as well as building everything yourself, allows you to climb down to any level of the system and adjust the parts as needed, including the compilers and build system. It gives you full control of everything running on the machine.

This kind of control is not commonly seen because most people don't want or need to build it all from source. But it makes sense in some contexts, like for embedded or security critical systems.