The basic premise of Fraction Spacing is to control how density is applied to a given object. Its application is to reduce the stitch build up often found in sharp turns or angles. This I believe is why it found its way to the Smart Corners tab, however Fractional Spacing existed many versions prior to the creation of Smart Corners.
The assignment of a density value is applied to the outside edge of a given object. How this is applied to the stitches is unnoticeable in a straight object. However, in an object that curves it is clear that the density value is met on the outside edge and the inside edge must alter itself to accommodate this. Depending on how tight of a turn or how heavy of a density setting has been assigned will determine how quickly and noticeable to stitch build up is.
I have found fractional spacing to be a useful tool for providing small amounts of density relief that can avoid the need to use Stitch Shortening. I have also found that values above .25 will usually be too drastic. Employing Stitch Shortening to the object would have been a better solution at this point.
What is important to note is that Fractional Spacing is not a tool with a variable. The feature is either turned on or off, meaning the adjustment to density is applied to the object whether it has stitch build up or it doesn't. Therefore, not only does Fractional Spacing adjust the density on the inside, but this would also lighten the density on the outside edge any time the tool is turned on. Because the value is applied to any object which the tool is applied to, this means that if the tool is left on at all times, then all objects with any curve to it will have a lighter density. This is similar to driving with your windshield whippers on all the time.
I often find Fractional Spacing turned on by default on many users systems. Ironically, I also find these same users report that a 100% Auto-Spacing value doesn't work for them and they normally need to set their Auto-Spacing at 70-80%. What is happening here is Fractional Spacing is lightening up the density value (in situations where it isn't needed) and then the user is adjusting the density back up through the higher Auto-Spacing value. A better approach would be to leave Fractional Spacing off, set Auto-Spacing to 100%, maybe increasing it to 90% for lettering objects, and employing Fractional Spacing when a tight turn causes a stitch build up. If the use of .25 Fractional Spacing values does not resolve the issue, then also use Stitch Shortening. Only using these two features on this one object that showed a need for it.