Dan's projection disk is based on an estimation of a player's performance based on age, past few years performance and a couple of other criteria. As in a season disk, real life players will underperform, over perform or be extremely close to the projection. For argument sake, let's say 20% underperform, 60% are nearly right on, and 20% overperform. That's just the nature of ramdomness in the game.

I love the projection season for playing along with the current season. I'm sure we all do it a little differently, but my approach is to play through the all-star game with actual lineups and pitchers for the game. I follow all transactions, injuries etc. I will make some exceptions. For example, if Joe Nathan is going to be out for the season, I might decide to let him play in my season. As the season progresses, I will do a couple of things differently from real life, for example:
1) a bench player is projected to hit .225. But in real life, he's hitting .325 and wins a starting job. I can either adjust his batting table by entering his real life stats so that he might hit .325 in DMB and justify winning the starting spot.
2) A transaction is made in which a player is sent ot the minors for underperforming and replaced with a guy with a mediocre projection. If the DMB player is outperforming his DMB projection, I won't make the real life transaction.
3) As the season goes on, if a player is significantly over or under his projection, I'll just change his event table to real-life stats. Otherwise, it might not make sense to have him in a certain place in the lineup. for example, if your #3, #4 hitter is hitting only .225 with 5 homers in real life, and they drop him to 7th or 8th, that wouldn't make sense in your DMB lineup if he's hitting his projection numbers of .325, 20 homers.
4) Trades get a little tricky, particularly in August and September. Let's say your DMB team is in contention for a division title or the wild card. But in real life, the team has tanked. The real life team might want to trade an all-star caliber player for prospects. You may choose not to make the trade in your DMB season.
5) Finally, I am a Giants fan. I tweak the Giants' players event tables to make them slightly better than projected

These are just some examples of how you can mix and match real life with what makes sense to you and what will make you enjoy playing your projection season out. Perhaps other gamers will provide ideas on how they play the game.