One thing it flags is if, say, you have some text that says
In the Encyclopedia of Frog Giggers, Aloysius Smith is said to have been born in Tasmania.<ref>p. 2</ref> His son Aloysius Jr. was the foremost frog gigger of his time and was elected a Renter Warden of the Worshipful Company of Frog Giggers in 1843.<ref>p. 10</ref>
<references />
* Foggybottom, Q.Z., Encyclopedia of Frog Giggers, New York: Stochastic House, 1976.
So it's not like it just senses white space - there's some minimum number of characters required to keep it from being a "bad reference."