Why anatomically does all my facial tension, neck, shoulder tension melt away when i splint both back molars with two rolled up paper towel balls?

Many possibilities: Could be anything from a misfit of the bite to erupting wisdom teeth to TMJ muscle related problems to bruxism (tooth grinding). Best suggestion would be to see a dentist for xrays and evaluation and find out why your treatment gives temporary relief.

Jaw Position: Anatomically, your jaw position is more at rest as are your facial muscles. Different position and relaxed muscles will relieve other symptoms. There's more to it than I can explain in this small box, but you should see your dentist since you would most likely benefit from an occlusal splint.

Placebo effect: By definition a placebo is anything that seems to be a "real" medical treatment.