I have to confess, this method of writing (and I've been reading about it on DWS's blog for quite a while now) baffles me. My mind just doesn't grok how that works. If you've only written 400 words of a story, how do you even know what the story's about and what you need to add/change when you cycle back? And I'm a planner; doing this without an outline is just incomprehensible to me. Of course, there are people whose minds do work this way, but I am not one of them.
I liken my method to creating a painting. My first draft is a sketch, blocking out what goes where (working from an outline, that basically tells me what goes where and why). After that's done, I step back and look at it as a whole so I can get a feel for the book as a whole, how it hangs together, if I've carried out the vision in my mind. I'll see that this bit is out of proportion, that bit doesn't belong at all, this other part would work better over here, I need to add something over there. I can't see those things unless I have the completed draft as a printed manuscript in my hands. My next draft is the final sketch, then I start layering in the colors, details, and shading.
People's minds work differently, and different methods work for different people. There is no right or wrong way, just what works best for each individual to produce finished books that other people will want to read. I like a lot of what DWS says about creativity and ignoring the "rules", but I think he does a lot of writers a disservice when he touts his method as the best and only way to write.