yeah rewinds are a reggae thing originally, so if you're looking for history look there. And yeah, bands do do rewinds and usually it sounds pretty funny to hear the band respond when capleton or someone says 'pull up!', a lot of drum rolling and instrument noise.
The thing you need to understand in these kind of sets, it's about building up the hype level to where it feels like the crowd is going to riot and then pulling them back down with a rewind, then building up again, etc. It's a peaks and troughs style, as opposed to techno's long dark tunnel or other seamless 'atmospheric' keeping the dance chugging along styles.
That said rewinds should be judiciously applied, too much of anything is not a good thing. Rewinding at the wrong time can definitely ruin the vibe, it's all about timing.