Playing at 'moderate' levels could, depending on loudspeaker sensitivity and/or how moderate is moderate, drive the amp to clipping or otherwise increase distortion since, in Class A, power dropped to 18 watts 8 ohm/ch from 90 per channel in AB (according to the spec sheet).
As far as having to play music with some reverb in order to notice a sonic difference? That's a new one on me. I'm reminded of a 1977 quip from Peter Aczel about a largely forgotten but back then highly touted (in some quarters) Bravura preamplifier. He was told that in order to listen, identify and understand its sonic benefits it had to be used in a certain way (V15 III G cartridge and Fulton J loudspeaker). Peter wrote how this "...led us to speculate about a preamplifier that must only be used for listening to Tibetan music while sitting on yackback."
One thing to note, at least in some later day Yamaha integrated amplifiers: David Rich found output levels in 'direct' mode were a bit higher than in full preamp mode, which in itself could result in a perceived 'subjective' improvement. For my part I never recognized any loudness difference going from Class A to A/B on the CA-1010. I did notice that it didn't play as loud or dynamically, which possibly might be expected going from 180 watts down to 36. In any case, from listening at low levels (regardless of how long the session) I can't claim there was a difference. If it was there it was extremely subtle. As with all of these things, YMMV.
If I had to characterize the feature it I'd file it under 'marketing'. Those were days of a lot of Class A action: Levinson, Lux, Stax, Bedini, Rappaport, Threshold, and even Pioneer (the Series 20 'plate' amp) come to mind.
About the preamp section being 'rather veiled'? I can't comment on that aspect as I never took apart the two stages, although it was easy enough to do with the junction on the back panel. I never really understood the practical purpose of the junction, unless once was attempting to biamp, or insert some kind of processor. Most integrated amps from that day sported the feature.
As a final word, I notice that Lux still makes those old style integrated amps. Very classy look and feel. But if you want Class A it's a dedicated proposition with Lux. No handy switch. And very expensive. But that's Luxman for you.