According to Apple’s source code, “dongle products get an iBSS with all of iBoot’s recovery mode accroutements, EXCEPT for filesystem support”.
Use of the iBSS
The iBSS bootstraps the iBEC, which prepares and executes the Restore Ramdisk. in addition, it sends messages to iTunes on the restore to supervise the restore process. It also integrity checks the images uploaded, and on iOS5+ does the image responsible for APTicket, by uploading the nonce string to iTunes then checks for the match of the APTicket and nonce and the signatures on APTicket. On custom firmwares, the iBSS is patched out of every signature check, but on certain circumstances it still generates nonce. Check APTicket for further detail.
iBSS in iOS 5.x is very similar to LLB/DFU, where it has the same protocol. On UART out, it says: "iBSS ready. Asking for DFU...", or something along those lines.
Interesting things I've noted are when certain bits in chip ID are set, it uses a different DFU device identifier (I've personally seen 0x1226/0x1228), and these modes reject any Img3 files sent over USB.