You've got it right. It makes the encryption key* more random. As far as I know, there is no real random number generation on computers, so you need something that goes beyond whatever the algorithm/processor combination can create. The salt is that something. GPG, like PGP, uses "entropy" during key creation---moving the mouse, hitting keys, anything that increases makes the state of the computer unique.
Update: Added "key" above, which is what I meant. Thanks to Abigail-II for pointing out my wording mistake. saintmike's post is very much to the point.
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