In the book Tai-chi stretching 太極導引 by the famous Taiwanese Tai chi master Xiong Hui 熊衛, the master recalled an incident of him being knocked down by a car, thrown up, fell to the ground and became unconscious. After he woke up, checked by the doctor, he was discharged almost immediately without senior injuries, except some minor bruises. Recently I saw TV program on a young man knocked unconscious by a tornado, fell from some five to six storeys high, with no broken bones. A person who can relax his body completely can seemingly dissipate great impact force without harm! How does it relate to our practice?
In break-fall, a practitioner of all throwing arts (tai-chi included) is asked to relax. With a more relaxed body, a practitioner's arms will less likely to be sticking out in the wrong places, and with the relaxed full body hits the ground, his relaxed muscles can protect his bones, he is therefore not easily injured. In chi-kung practice without throw training, some masters teach their students to fall in a meditative mode under the mind (or chi) direction of the master. The master simply raises his hand, without actually touching his students' bodies and his students in meditative mode will fall AS IF their master can use his chi to push the air and the air pushes them down! From the outside it looks like a demonstration of external chi force (外發氣功). The students will fall down safely, and with enough practice, the students learn how to relax and learn to fall at the same time. Famous Wu-style Tai-Chi master Wang DiXian 汪棣賢 in his book Wu-style tai-chi, straight and curved forms (吴式太极拳（走点线和走贯串） showed two video demonstrations of this "chi-induced" breakfall without offering any explanation.
As long as the master and his students understand what is going on, it is absolutely a legitimate (and actually quite clever) way of practice, though for people practicing the throwing art, such method becomes unnecessary. Using one's mental suggestion (意念) in practice is quite common in internal martial arts, in particular I-style (that's why it is called 意拳!) For example, in standard zhan zhuang stance, a practitioner is commonly asked to imagine holding a ball with his arms. In a meditative mode of mind, chi will be generated to enrich the required "sleeping muscles" to hold up the imaginary ball.
Problem arises when the master is deluded into believing himself to have special chi power that enables him to off-balance any adversary without even touching him. One can google for videos in youtube for masters being embarrassed by unable to off-balance a reporter, or some poor soul who solely used this "power" to fight against an average MMA fighter with, as can be expected, disastrous results!