The reason for the $1.00 authorization is for fraud check. The amount of $1.00 is authorized so that AVS and CVV2 can be checked without placing a large hold on the customer's account. The issuing bank does not check AVS or CVV2, they simply return this information and place a hold on the customers funds. If the transaction does not pass fraud checks, such as AVS (perhaps the customer mistakenly entered an old address), only $1 is held rather than the entire purchase amount.
A successful authorization is a two step process. First, the authorization is submitted to the issuing bank. They approve or decline. If they approve, a hold is placed on the account.
If approved, the billing address is then submitted to AVS. If AVS fails, the entire transaction is declined, but the authorization hold remains.
Putting a small authorization through first ensures that customers won't have a large phantom hold in their account if AVS fails.