Exactly what rhys said. We don't know for sure that your mode c level is actually accurate, you may be on the wrong qnh, the transponder may be sending out incorrect data, all kinds of things so we let the other guy know that we don't have total confidence in the level information they are being given. It's the same as why most controllers use the phrase "intentions Unknown" when giving tracking information on VFR aircraft, we need the other guy to know that this traffic they are getting may behave unpredictably. For information, we will pass an IFR aircraft traffic on observed VFR aircraft that will get within 5nm and have a mode c level within plus/minus 2000ft.
As for whether or not to answer, it's a bit of a judgement call. If you hear the phrase "safety alert" or "avoiding action", it's probably a good idea to let us, and the other guy, know your intentions. I don't want to give avoiding action to an IFR aircraft only to then have you turn back into them. If it's just routine passing traffic, but centre sounds really busy, probably best to just stay quiet. If we really want to talk, we will chase you. If things seem quieter and you believe we are referring to you, by all means call up and let us know your intentions. The fact that you are listening on the area frequency even is a lot better than a lot of VFR pilots, and there is a lot of important info passed on the area frequency such as hazard alerts, traffic, military low jets, and weather updates.