What is the purpose of story, after all? Is it to lose the reader in the fictional world you've created, to let them identify with your alluring characters and imagine themselves in their place? Almost all the time, yes, and I think this is what J was talking about. For the vast majority of stories, anything that pulls you out of the story and reminds you that you're you and not the protagonist (or antagonist, etc.) is probably a problem. You're weaving a spell, a bedazzlement, and a sudden intrusion of the reader into that illusion is as jarring as seeing the little strings up a magician's sleeve.
But metafiction is all about showing the reader the strings. To quote John Gardner's Art of Fiction (which, if you're interested, covers all this in far more depth than I do here), metafiction "means fiction that, both in style and theme, investigates fiction" (86). He goes on to say that "conventional fiction can be an instrument for examining the world; and, like any humanly devised instrument, it can malfunction. Like a faulty microscope or telescope, it can persuade us of things that are not true" (86). This is a subject that deeply interests me. I write stories that are almost pure propaganda at times, such as "Morningsong" (a blowjob story where you don't find until the last lines that the participants are two men). In this sort of story I especially am looking to persuade, to even trick the reader. Anything that throws the reader out of the illusion will destroy my story. That's fine for propaganda. It's even fine for most stories; I might not care if most of my stories give readers a slightly skewed view of the world. If I'm not aiming to educate, then I don't need to be utterly careful and precise in my use of the tools; I don't need to worry about whether I've twisted things a bit. (I might worry about it anyway, but sometimes, in conventional fiction, it's hard to avoid a bias).
What metafiction does is basically say to the reader, 'I know I have biases; I know I can trick you, and in this story I don't want to trick you. I want you to look clearly and critically at what I'm saying in this story, at the world I'm representing. To make that easier for you, I'm going to show you the strings of the magician, I'm going to bare the bones of the story so you're not too distracted.' Of course, this can backfire. Perhaps the largest danger is that showing the strings will distract the reader; after all, they're not used to seeing them. Metafiction can seem overly difficult, complex, even boring. A reader may be thinking 'I don't *want* to see the strings; I want to fall into the story'. You've probably lost that reader, and there's honestly not much you can do about it. Metafiction is not every reader's cup of tea. "Human beings can hardly move without models for their behavior, and from the beginning of time, in all probability, we have known no greater purveyor of models than story-telling" (86). He gives a wonderful long example here, going on to say, "Nothing in the world has greater power to enslave than does fiction."
I was concerned about the fictional dream when I wrote "Mint in Your Throat" (note: I don't mind critique and commentary on how well I achieved or didn't achieve all of this in this story, btw. There's always more to learn...). I was dealing with a problematic issue, the problem of arousal in rape, and I strongly did not want to persuade. I wanted to examine, and to have the reader examine along with me. I was aiming at something of a target audience; people who either knew about the disturbing prevalance of an arousal reaction in rape victims or were willing to believe in it without having seen the (overwhelming) statistics. I took the chance that I might lose some people, that without the help of the convincing fictional dream, some people would be so caught on their disbelief that the story would fail utterly for them. I could have avoided that by writing a persuasive story in first person, or even third -- but I would have felt that I was doing my readers a disservice. I wanted them to stop, pause, perhaps even be shocked when my protagonist went to bed with her roommate after the rape; in metafiction "the breaks in the dream are as important as the dream". (87) Again, Gardner illustrates his point with helpful examples.
I was writing a piece which invited the reader to examine her assumptions and values. It was in some sense half essay and half story, or an essay told in story form. It was certainly not the traditional story. There are people who would excommunicate metafiction from the realm of story, and indeed, perhaps it is a different beastie entirely. Yet I think it is useful, and interesting, and shows a certain respect for the intelligence of the reader that I appreciate. There are times when I want to be a dazzling magician on the stage, listening to the audience 'ooh' and 'ah'; there are other times when I want to invite a colleague into my parlor, and show him how the tricks work, and ask what he thinks of it all. There's a certain relinquishment of authority going on then, which is very in keeping with modern literary theory (and academic theory in general), and it appeals to me.