To be fair, munged permissions are a real problem; Just the other day, Parallels released an advisory document[1] about an issue their users had been seeing related directly to filesystem permissions.

I believe that "fix permissions" scans the installed package receipts and corrects the file permissions where necessary. In a world where any errant package install can mangle modes and ownership, fix permissions will not go derelict.

What it's actually for is the fixing of mangled permissions.

[1]: http://kb.parallels.com/en/113749