The person who's wobbling their head is agreeing to what is being said. It's not a yes/no.
It's mostly a "Go ahead and say what you want, I'll do what I want to do after you're done".
I didn't grow up in India, so I can see it for what it is, but I am Indian, so the subtleties are visible to me.
And aptly, people who don't need to take any shit/be kind in that instance/appear submissive don't "wobble" their heads. Those people mostly reserve it for their elders (parents/elder relatives mostly).
Take all of this with a huge grain of salt.