In my experience the chordal drama varies with the type and background of the players involved. Many of the indie-rock or songwriter bands I play with seem to just memorize the chords and progressions, even the ones they write. I'm not sure some of them have much of an idea about theory. On the other hand, there are a number of bands here that really know what they're doing, and are a true joy to play with.
Some years back I recorded and played with a songwriter who tuned her guitar to a different set of intervals for each song, and just moved her fingers around until it sounded right. Her tunes were quite beautiful, and contained some really rich chord extensions. Not knowing that didn't change things for her...
Many of the country bands I've sat in with over the years have used the "out chord" description to me, often referring to a 2 major, but just as often to a flat seven or even a 3 minor. I'm amused that they assume I won't have any idea of what a chord might be, if it's outside the I, IV, V.
In bands I've played with for some time, I'll find myself describing a tune and ask, "Do you know the number system?" "Oh yeah, 1,4,5, I know that." And I'll mention the song has a 5 minor chord, to receive a totally blank stare. There is a lot of limited theory application going on out there.
I'm not the fastest, cleanest, or "most nashvilley" steel player, but I have a very good ear, and can sit in with almost any kind of band and sound pretty much as if I know all the tunes. I attribute that skill entirely to an understanding of music theory, and applying the number system and theory to the sounds and cues inherent in the music as it goes down. (Michael Johnstone's "5000 gigs" concept, although with study and application I think you could knock it back to 500
)
One of my favorite experiences with this facet of playing was on my very first night in Atlanta, I had heard that local hot shot Jerry Fagan needed a steel player and went out to sit in with his band. He just loved me after the band's opening set, hired me on the spot, and grinned like a fool during the cover tunes he sang... but got angrier and angrier as we played more of his originals. When I asked him what was wrong he went on a tirade about how his songs weren't "the run-of-the-mill basic I IV V $%@*, and people have to
learn my songs, I have to
teach 'em how to play these..."
I said, "So you're telling me it's ticking you off that I can play your tunes without making obvious mistakes?" As ridiculous as it sounds, that's what it was.
Other than that kind of scenario, I can't think of a better thing a steeler could do for their playing than learn bandstand theory (the construction and theory behind the types of tunes you'll be playing) and practice playing by ear to CDs and with bands.
Then the "out chords" will mostly all become "in".