I see the red release transaction code a lot under leage transactions. That always told me that somebody signed a player, but never assigned him and ten real life days went by. It is my opinion that the language used in the example within the help blurb is a poor choice of words. The way that I understand it is that, after 30 game cycles (each cycle being 8 real life hours), if the player that was signed is not assigned, the sim auto releases the player. There have been times where I have signed too many minor league free agents and I have several players that remain in NEEDING ASSIGNMENT status through spring training. However, my number of players needing assignment dwindles the closer I get to the end of spring training. The reason this happens is that if I signed a guy at the beginning of free agency, after ten calendar days of not being assigned, he is auto released. However, if I sign a player near the end of free agency, his tens days lasts closer to the beginning of the season.
As far the stashing strategy, I think even players unassigned are eligible to be placed in the rule 5 pool. I have 26 unassigned players in one of my Worlds and all the minor league guys have a maroon colored 5 icon next to their name.
I think the biggest advantage that keeping your players unassigned gives you is the potential that it gives your franchise an advantage in signing minor league free agents by making the sim think that there is little depth on your squad.