I think I know what you're talking about, I owned a zip drive about 4 years ago.
As I recall, I did the experiment with covering it up, and my drive didn't like it. My best guess is that it was a combination of Iomega's licensing system and disk identificaiton. IE in case someone came out with a Zip-sized floppy, it wouldn't work - or if some company tried to manufacturer unauthorized (unlicensed) zip disks, they'd have to replicate the little reflector thing too. ?? dunno. Seemed to make sense though that if "Big media company X" wanted to make zip disks, iomega would say "ok, we'll license you to make 100,000 disks - and you'll have to buy 100,000 little reflector things from us for them to work."
Edit: A Little searching with google seems to confirm this. Apparently Iomega was sued in Europe for something related to this, some company was producing knock-off zip disks, and when iomega released its notebook zip drive, their knockoffs wouldn't work b/c of the way it read the reflector. (at least, that's what I can gather from the slightly choppy facts online) It sounds like Iomega holds a patent on the reflector "thing" in the disk.