Ok, so the accepted theory is that there are two teams, two HOHs (one from each team), and they each nominate two from the other team. Battle of the Block determines which set of nominees are official, etc.
But then, why win HOH? You aren't guaranteed safety and you're not guaranteed to get a target out. But you are guaranteed blood on your hands. Great..
What's the incentive to win HOH then? My guess is that the Blood vs. Water twist is legit -- the incentive is to protect your loved one that is on the other team. It's a perfect tie-in with BvW.