You're right, it's basically a drain line. With the "newer" sleds with pressure operated exhaust valves they run a line from the underside of the diaphragm to a solenoid valve (white arrow). This way when the SV is closed, pressure builds in exh valve under the diaphragm and it opens like normal BUT when the ECU needs to (for engine protection...) it can open the SV so that the exhaust gasses go out the drain hose and cannot build pressure causing the exhaust valves to close.
Long story short, route the drain valve out your bellypan somewhere so you don't get a black oily mess in the bellypan.