The holes allow some water to circulate. If there is no circulation, the heads (where the coolant temp sensor is usually located) will get really hot while the intake manifold (where the thermostat senses temperature) stays cool. Drilling the holes lets some water circulate so the engine warms evenly and the thermostat opens before the head temperature gets too high.

In my case, I believe there is too much circulation before the thermostat opens. I have replaced the thermostat and it hasn't fixed the problem, I've even replaced the entire engine. One day, I may study the cooling system of the 350 a little more closely and plug or restrict something so the engine warms more quickly.