Enable full screen mode in iBooks on iPhone
The official text of the feature says:


  Full-screen layout lets you focus on the words without distraction. 


I believe that full screen feature is referring to only having the book title on top and the page number at the bottom of the screen. You can activate it by single tapping in the center of the book. This will get rid of all other UI elements, including the status bar on top.

It doesn't necessarily give you more screen real estate, it just gets rids of these extra distractions.

Here's a good example of the difference between "full screen" (left) and normal layout (right):



As you can see, it doesn't actually increase the reading area, it just hides the status bar and the additional UI elements, and actually adds the book title to the top.