Debunked: Actually, they don't. Wrap dresses look great on women with narrow waists, big hips and big boobs. They rarely help to define an undefined waist. (My hip-to-waist ratio is practically zilch, and I look like a rectangle in a wrap dress.)
If you'd like to define your waist, try a belt. Or a dress that gives the illusion of a wrap dress, like this one.