The Mountain Witch Trick: fleshing out a game world in play

I bumped into a reference to 'the Mountain Witch trick' in a description of a role-playing gaming session. I knew it had to be a reference to the game The Mountain Witch, but I don't own that game and wasn't sure what was meant. I knew it had to be cool, though; everything I've read about The Mountain Witch has sounded cool. ;)

Here's what I dug up: as a gamemaster, you tell a player that his or her character reacts to something/someone in the game. Then you ASK the player why. Tell 'em they meet someone who seems familiar, ask 'em why. That sort of thing. Allow them to invent their own background. Here's my source, with a more detailed description.