You're sampling a portion of the output (the headphone jack), and coupling it into the input. That's what feedback [u]is[/u]!

It sounds diferent your way, because instead of building up the sound based on the guitar's resonances, you're strarting from the low-level 'white noise' in the amplifier, and buliding up whatever resonance the amp has. Adjusting the master volume 'tunes' the amplifier resonance to a lower pitch, while also making it louder.

(Yes, this is a well-known old trick)