If it was only the case that "no confusion arises" if a conductor uses strictly transposed note names. But alas, that often isn't the case. When I'm reading a horn part in an orchestra and communicate a note with other musicians, I instinctively always transpose my score to C. I always communicate sounding notes, not written. Many conductors do the same -even- if they are reading from a transposed score, and personally I think that's the clearest way of communication: "Your sounding D" is crystal clear. "Your written E" -may- be clear, but there are always cases when, say, the conductor is reading from a different edition than the player where a specific place might be notated differently. That's why I find, in order to avoid confusion, it's best to always talk about the sounding notes, not a specific notation.
This becomes especially pronounced when a conductor is talking to a whole group of instruments. He won't say "please, woodwind section, play this chord for me that is an E-major chord for you Bb clarinets and a D-major for you bassoons and an A-major for you Englishhorn". He'll say "play this D-major chord", and the players are supposed to transpose this, because honestly, that's the quickest, most efficient way to communicate this information. It is, in such cases also -important- that the musicians don't just read their note and play it, but understand its function in the current harmony. A Bb-clarinetist who plays a sounding F# in said chord will have to realize that he's playing the third of a D-major chord and not just "a written G#".