AD&D has only one rule that matters: "The DM is always right."
There is no other rule of consequence in AD&D 1E. Everything else is, per the DMG, explicitly suggested default options for the DM.
Like [MENTION=22779]Hussar[/MENTION], I don't think this is a fair reading of the AD&D rulebooks.
For instance, from pp 7-8 of Gygax's PHB:
This new system provides the Dungeon Master with more and better material from which to devise the campaign miieu, and that in turn means a more interesting and imaginative game for the players. . . .
This game is unlike chess in that the rules are not cut and dried. In many places they are guieines and suggested methods only. . . . Rules not understood should have appropriate questions directed to the publisher; disputes with the Dungeon Master are another matter entirely. THE REFEREE IS THE FINAL ARBITER OF AL AFFAIRS OF HIS OR HER CAMAIGN. Participants in a campaign have no recourse to the publisher, but they do have ultimate recourse - since the most effective protest is withdrawal from the offending campaign. Each campaign is a specially tailored affair. While it is drawn by the referee pon the outlines of the three books which comprise ADVANCED DUNGEONS & DRAGONS, the players add the color and details, so the campaign must ultimately please all participants. It is their unique world.
Given that the books then go on to present hundreds of pages of rules, mechanically-defined story elements, etc, I don't think the intention is for all of that stuff to be of no consequence.
I think these passages from Gygax's DMG, p 9, reinforce the role of the rules:
Read how and why the system is as it is, follow the parameters, and then cut portions [eg wandering monster rolls, as pe an extended example that fills the bulk of the rest of the paragraph] as needed to maintain excitement. . . . The game is the thing, and certain rules can be distorted or disregarded in favor of play.
Know the game systems, and you will know how and when to take upon yourself the ultimate power. To becomethe final arbiter, rather than the interpreter of the rules, can be a difficult and demanding task . . . [Y]our players expect to play this game, not one made up on the spot. By the same token, they are playing the game the way you, their DM, imagines and creates it. . . . Read and become familiar with the contents of this work and the one written for players, learn your monsters, and spice things up with some pantheons of super-powerful beings. Then put your judging and refereeing ability into the creation of your own personal milieu, and you have donned the mantle of Dungeon Master.
The long discussion of wandering monsters is interesting, because it highlights which "certain rules" can be distorted and disregarded and which not:
[T]he group [of players] has worked hard to suppy themselves with everything by way of information and equipment [as per the advice on pp 107-9 of the PHB] . . . They are gathered together and eager . . . But lo!, every time you throw the "monster die" a wandering nasty is indicated, and the party's strength is spen trying to fight their way into the area. . . . Expectations have been dashed, and probably interest too, by random chance. Rather than spoil such an otherwise enjoyable time, omit the wandering monsters indicated by the die. No, don't allow the party to kill them easily or escape unnaturally, for that goes contrary to the major precepts of the game.
It is also interesting to look at p 110, under the heading "Rolling the Dice and Control of the Game":
t is your right [as DM] to conrol the dice at any time and to roll dice for the players. You might wish to do this to kep them from knowing some specific fact. You also might wish to give them an edge in finding a particular clue, eg a secret door that leads to a compex of monsters and treasures that wil be especially entertaining. You do have every right to overrule the dice at any time if there is a particular course of events that you would like to occur. In making such a decision you should never seriously harm the party or a non-player character with your actions. . . .
Now and then a player will die through no fault of his own. . . . [Y]ou do have the right to arbitrate the situation. You can rule that the player, instead of dying, is knocked unconscious, loses a imb, is blinded in one ey or invoke any reasonably severe penalty that still takes into account what the monster has done. It is very demoralizing to the players to lose a cared-for-player-character when they have played well. When they have done something stupid or not taken precautions, then let the dice fall where they may!
I think the general tenor of this is fairly clear. The GM shouldn't fudge the resolution of combat except to mitigate the death of a PC belonging to a player who has played with skill. The GM can fudge certain other action resolution (eg looking for secret doors) when what is really going on is not confict resolution but rather framing the situation - such as the example about finding a secret passage to a fun sub-level. Whereas the clear implication is that if the PCs are fleeing from monsters, and come to a dead end, the GM shouldn't fudge the secret door roll at that point, because the players are meant to be able to handle these conflicts thorugh their own skill and luck (eg use a wand of secret door detection).
Simiarly, when Gygax says that the GM is the final arbiter, I think he mostly has in mind decisions over fictional positioning and framing the situation. The GM gets to set the challenges (including via manipulation of wandering monster dice, secret door dice etc). But the GM is not entitled, for instance, to declare a monster's miss a hit, or to declare a player's hit a miss. That would fall under the "never seriously harm" prohibition.
Even when the GM is given authority to ameliorate player losses, s/he is still obliged to take seriously the monster's success, and to infict some non-fatal penalty commensurate with the monster having won the encounter. (This is the closest that Gygax's rulebooks get to "fail forward", I think.)
Linking this back to [MENTION=22779]Hussar[/MENTION]'s ideas about early/proto-story-gaming, we see the game evolving from one more like a boardgame or tactical wargame, in which all the framing and content-introduction after the initial situation is handled via randomisation, into one in which the GM takes responsibiity for content-introduction and framing so as to foster and reward skilled and enjoyable play.
It's pretty natural that, as players got involved who weren't that interested in Gygaxian skilled play but who still saw the GM as responsible for supporting enjoyable play, that the GM would be seen as having responsibilities to exercise authority out of different motivations. But many later games, especially in the late 80s through the 90s, were even less clear than Gygax in the passages I've quoted in distinguishing between authority over framing ("situational authority") and authority over content-introduction ("backstory authority") on the one hand, and authority over resolution of conficts ("plot authority").
Hence the trend towards more-or-less explicit illusionism.
I read the 1e DMG as "Advice as Intended", not RAW. This advice is about having fun roleplaying situations from Fantasy tropes. Some explicit advice is "Engage the characters !" (for instance, when suggesting to introduce rival organisations when a character establishes one), or "Cut the crap !" (for the stronghold location case cited by pemerton, I believe Gygax doesn't think player empowerment, but rather Take 20). The tech of the game gives power to the players almost exclusively via magic... but I think it would be a mistake to reduce the game to its RAW. First, because we know this RAW is simply a picture of the state of the art when it was written. Gary and co were rules tinkerers, as was any 1e DM, and I believe player fiat played an important part at every table where new material was introduced (as in "I want to play a Van Helsing type "). Second, some of the tropes explicitly invoked by the game blur the frontier between the characters and the world : how would you Alice in Wonderland or the Amber saga without Player fiat ? You can have convoluted mechanisms based on the Wish spell... or you invent Fate points. Early D&D was very much a tool box waiting to be expanded.
I think this is all correct.
A trend in RPGing that seems to emerge over the course of the 80s is a type of ossification or rigidification. Material that players, in early years, generated as part of their play, becomes treated as the sacrosanct material for others' play. You can even see this in AD&D itself: elements of a spell like fireball, which were clearly generated as GM adjudications in the course of play, get reproduced as rules material for others to apply, rather than instead emphasising the role of the GM in generating such adjudications as part of play (eg via the item saving throw table).
You can also see a trend towards tightening up player authority in favour of expanded GM authority in the contrasting approach to "monsters as characters" in OD&D (yes!) compared to Gygax's DMG (certainly not!). I think there is a similar reversal in relation to the introduction of game elements like classes, weapons, magic items etc.
This seems to be a reaction to players doing things to break the game. And you can see those sorts of concerns in some posts in this thread. But just as there are ways to make fireball adjudication non-arbitrary without requiring the huge increase in spell description length that AD&D involved, so I think there are ways to control player introduction of broken content without simply stamping out player authority altogether.
