This feature allows to fix aspect ratio for viewing images. If a non-optimal display resolution is set in which pixels have non-square shape, an image distortion occur, which does not allow view images in the original aspect ratio. This feature can automatically fix the aspect ratio for the most of CRT display monitors and also allows to configure correcting images for other displays (most of LCD) which don't report correctly its physical resolution and size.
To call a configuration dialog, first turn the option off (in the View area pop up menu), and then turn it on again. When the option is turned on, a dialog appear allowing to adjust correct ratio manually. Once the correction is adjusted once it is not necessary to call this dialog again: in any other display resolution this settings will be enough to correct pixel shape and provide normal image view.
As it is described in the text appearing in the dialog itself, use arrow keys to change bounds of the rectangle to make it looking as a square (and a circle at the center also should be looking as a circle but not as an ellipse). When press <Enter> key or click button OK (if you press arrow key at least once, check box at the bottom of the dialog is checked automatically, and checking it you force your custom adjustment used rather then automatic ratio fixing on base of information about current physical display size obtained from the display driver).
Tips:
1. It is possible to click with mouse anywhere in the white square to close the dialog. This can be useful if you just want to turn on the "Square pixels" option and don't want change the adjustment.
2. If you want make your adjustments as exact as possible use any sheet of paper of size about 5-7 cm (2-3 inches) or any other small object (but do not use objects which can damage your display surface!). Use it to measure exactly sides of the "square" while adjusting it with arrow keys: both sides should be equal for ideal square shape.
3. Another way is possible if you want just to achieve the same aspect ratio as you can obtain using optimal display resolution. Just switch to such resolution (e.g. 1024x768), check the option "Fix Pixels Resolution" and close the dialog. Since this you can switch to any resolution with this display, and in any of those it should show images with a correct aspect ratio (when the option "Square pixels" is on, certainly).
Note: fixing aspect ratio is not applied to image thumbnails in the File list view so those stay distorted when the display resolution is not optimal for your display.