As of July 2008, this is how the system works.
First, let me provide a little background. Priority Date is the date your PERM is filed (in Case of EB-1 or NIW – the date your I-140 is filed; in case of Family-based petitions – the date your I-130 is filed.).
When the Visa bulletin shows a category is current, the I-485 (AOS) can be filed in the month the PD is current. Once AOS is filed, if the PD stays current, CIS continues to process the case. They call you for FP, put you through security checks and if no further evidence or questions are raised – approve the case. Upon approval, they seek a Visa Number from the State Department. Once that visa number is received (by fax or electronically), they approve your AOS. Eventfully, your GC is produced and mailed to you.
If the PD does not stay current, CIS puts he adjudication on hold till the PD is current again. When the PD is current, again AOS processing is resumed. This part makes no sense to me, but that is how, I believe they generally do it. Now, if you are fortunate enough to have already been assigned a visa number, your case may be approved even if the PD’s slide back again. But if your fingerprinting has not been done, you cannot get a green card approval.
Do feel free to correct me if my understanding is incorrect.