Now, I step with some trepidation into a debate mainly about Australian procedures (of which I have very little knowledge and zero experience, coming from the other side of the world), but.....
I was with Derfred and his/her practical explanation....all the way up to the last line. My own view is that ATC is nor, or should not be in the business of rewarding or penalising any aircraft operator. Rather ATC should get on with sorting the traffic out is the most efficient way overall - no favours or special handling involved.
On to the original question, I'm not sure when ICAO adopted the phraseology and meanings that have been well explained here but I do recall in the UK some 20 or 25 years ago there were instances, mainly from one operators, where the crew were telling ATC 'We're getting a little tight on fuel' and often the controller, being a simple, caring human being, would maybe give a bit of priority to that aircraft all other things being equal. Of course it didn't take long before other operators wised up and would make similar claims. The CAA then issued guidance that said, if a pilot makes noises about fuel remaining the controller asks if the pilot wants to declare an emergency - simple question and quick answer. If it's 'yes', that aircraft gets all the priority available, if it's a 'no' then all the flight planning rules are working just fine and the aircraft will land with the legally required reserves.....won't it.