I too found this to be confusing. I researched it, and found the following article. "On the formulation f ASCE 7-95 gust effect factor" by Giovanni Solari and Ahsan Kareem. It is found in the Journal of Wind Engineering and Industrial Aerodynamics 77 & 78 (1998) pp. 663-672.
Before going on, understand that in ASCE 7-95 and 7-98, the gust factor is a combination of a gust load effect and a dynamic structural response. For rigid structures, the dynamic response is insignificant. For flexible structures, it is significant, and this results in a higher overall gust factor than for a rigid structure.
This article is about the 7-95 gust factor, but on reading it, you will see that it also matches the gust factor in ASCE 7-98. It is a bit unclear on some of the details, but the gist of the main point is in section 2 of the article. "... in ASCD 7-95, the use of 3s gusts introduces a new twist, as the design wind already included the effects of gustiness. Accordingly, for a very small size structure, the new gust factor reduces to nearly unity and further decreases due to the spatial averageing resulting from a lack of contemporaneous gust action."
This second sentence is a bit confusing, and is clarified by another paragraph, earlier in section 2:
"Gustiness in wind introduces dynamic loading effects on the system, which can be examined in terms of a gust loading factor. In order to evaluate the peak response of the system, the peak wind load must be considered. Maximum load effects are due to correlated high pressures over the entire structure in the form o feddies a least of size of the structure. Eddies of a small size compared to the structure impinge successively rather than instantaneously and hence are unable to correlate significant pressures over the whole structure. Eddies which are larger envelop the entire structure and hence are able to cause well-correlated pressures."
I think this explains why the gust factor can be less than one.
These words describe the dynamic loading on a structure. For a rigid structure, the dynamic response is insignificant. For a flexible structure, the dynamic response portion of the gust factor becomes significant, and increases the overall gust factor.
I hope this makes it a little clearer.
Regards,
Chichuck