Actually, you can sway quite a bit at this point, because it is acceptable to break at the knees and ankles - that lets you have a huge statically swayed shape while still having your center of mass stationary over your standing foot.

However you are correct that the primary benefit of using sway is to balance turn. The knee trick is mostly to let you practice some of the skills which must go hand in hand with sway (such as keeping your head aligned with your spine) while slowly changing sway - and of course for the less dynamic sways, which are called picture lines.