I've been around a long time and I've never heard that. Have you heard it from multiple people or one particular person? I'm just wondering if it's a regional thing or maybe something a particular person or family is doing. Chicken keeping is done in a lot of different ways, that's for sure.
I do know that wood ashes are great for dust bathing, to prevent or treat external parasites. You can mix them into the dust bath area. I've heard of chickens bathing in piles of straight wood ash that they found. I think the recommendation is usually something like 10%, though.
I've always managed my coop litter with just wood shavings. You don't want coop litter that's too wet or has too much poop for the amount of litter. Then you have a stinky coop. You also don't want a litter that's too dry or it's dusty. The sweet spot in litter management is somewhere in between. I would worry about excess dust in the air, if not done carefully.