Correct me if I'm wrong. You clearly have more grasp about the matter.
My take here is that, different speakers responds differently on certain frequencies. The stock speakers on the FD in particular are boomy, so I can understand why the factory DSP "EQ'd out" some of the low frequencies. Putting in a different speaker that has a more flat response, can be perceived to be a weak bass performer. That is why there's a need to flatten the EQ (which is what 'DSP Flat' does) to bring back the frequencies that the stock radio has attenuated.
This is the method how this hack is performed:
Honda Civic OEM radio Hack HD - YouTube
The difference is very apparent. It's like the "Loudness" button has been switched on.