You might have heard this argument, that the GM should be in charge of the game world and the players should be in charge of one (and one only) PC.
The players shouldn't tell the GM how to run his world and the GM shouldn't tell his players how to run their characters.
I'm going to tell you, why this is a half-truth.
So I'm in charge of my character. Great. He's a half-elven Ranger of 3rd Level and invested into the Dodge, Mobility and Point Blank Shot feats.
Thats it.
What do you mean, 'He's supposed to have a backstory?' This isn't covered in the rules. Are you telling me already how to run my character?
Ah well, just to make you happy: He's from Cheeseville, Cheesehausen and has a skin made of CHEESE!
Still not happy? Now why could that be?
You might argue that the above example is a bit extreme, so replace the cheese with, say, being adopted by orcs when he was very young. Now thats cool with you isn't it (especially since it explains him havin orcish as a bonus language)?... except when you look at your campaign world you suddenly notice, there aren't actually any orc tribes living anywhere near the area the game is set in. So the player can't play the character he likes, even you as a GM would be cool with it...
Aaaah no sweat! You simply create a orc tribe and place it into an empty corner of the campaign world. Done. Fixed.
But wait a moment! The player said "My character was raised by orcs" and suddenly there are orcs in your campaign. Isn't this (*gasp*) Player Empowerment?
OK, you as a GM had to approve the change. And the GM knows what is best for the campaign world, right?
Right.
Except when he's wrong.
Say, I'm having my character have a affair with a hot NPC and this is really giving (in my opinion) making the character shine. The GM, however, thinks it would make for a great adventure starter, if the NPC would be killed (and the group going off to hunt the killer ...blahblah).
Now he might have had the best of intentions, but effectively he ruined what was cool about the character for me. I could continue playing him, but it would
a) not consistent with how I played the character before
or
b) no fun for me
You only way you wouldn't have a problem with this, is if you're buying into the railroader credo "The GM knows what is best for the campaign world AND for the PCs!"
And I'm not drinking this flavor of Kool-Aid, thank you very much!
So divorcing GM-world-control from player-PC-control is really an artificial distinction, no matter from which angle you approach it.
On a more basic level, what are we really talking about?
Something I call "truisms", things that apply to the campaign world, even though they aren't in the rules.
Things fall down. The characters breathe air. The basic stuff.
But who enforces these truisms?
The GM alone? Hardly. Think about it: if you were a player would you want to listen to all the possible situations that can arise in the game, to find out if this kind of GM-style fits your idea of a fun game.
Nope, you just ride along, expecting the GM is operating on the same premises you are. If a situation comes up, that makes no sense whatsoever for you, do you quietly suck it up or do you tell the GM "what the fuck do you think you're doing?"
For me its the latter, including when I GM myself. The art of listening to my players, reacting to their objections, shortly explaining your call or, if you see their point, quickly adapt the game world so that play can continue is are among THE most important techniques for a GM.
To avoid accidental mishaps like the dead-girlfriend above I let my players fill me in (in very general terms) which directions they would like to see the game go down (and, more importantly, which not).
So how does this theory work in games where the players have control over the game world (through Stakes or what-have-you)?
Not much different, really.
In the above example the players already perform a kind of QC-check on what the GM says and if they don't like it, well either be a bastard and force through your version (and lose the group in the process) or adapt and prosper. In the same way the players are checking the content of what the other players contribute and object when they feel its necessary (like the GM any player has the power to refuse a compromise and "run away with the adventure", but for the same reasons as why the GM doesn't do it, the player also doesn't do it).
To make sure everyone is on the same page from the beginning these kind of games often require you to set some basic truisms of the game from the beginning that define what the session/campaign should be like.
This makes the process manageable and fun for everyone involved.
It also avoids PCs being crushed by a random Sperm Whale.