I’ve never heard that before, but that doesn’t mean it’s untrue.
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Since your experience level is about a hundred years more than mine, if you don’t know about it, I probably read it wrong. 
I have seen other leather artists diluting their dye in order to get a lighter or softer color effect. In the case of alcohol dye, you’d dilute with alcohol and in the case of water based dye, you’d use water (I have no suggestions for oil based dyes - don’t really work with them). Can’t give you much advice beyond that, as I generally use dye as a base coat before painting, rather than as the sole color effect.
It’s interesting that the color came out so different from what you were expecting (I think it looks nice, FWIW). What brand of dye did you use, and did you do anything else to the leather? FE, did you apply leather conditioner, or apply several coats?
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It was some Fiebings leather dye with a top coat of Angelus acrylic finisher. (I’ve also got some Fiebings Resolene finish, I just happened to pick up the Angelus first.)