This is useful to compensate for e.g. routing audio via outboard effect processors, where the audio's journey out of your audio interface and back in to the computer introduces a latency into the signal. For example you may find it useful in conjunction with Logic's Helper->I/O plug-in.
For it to work, the host application must support 'plug-in delay compensation' and the feature must be turned on. Recent versions of Logic and Digital Performer support this feature, for example. (Preferences->Audio->General in Logic.)
In general applications will not respond to changes in the latency setting during playback. If you need to interactively set the latency, try setting this plug-in to a large setting and then using my Buffer Delay plug-in to experiment with different settings. Once you've found the correct values, subtract the Buffer Delay delay from the latency setting and remove the Buffer Delay plug-in.
Unfortunately Logic 6 does not respond to changes of latency at all, even when playback is stopped. As a workaround, Latency Fixer remembers its last used settings and uses them as defaults when creating a new instance of the plug-in, which is the only time Logic 6 queries the latency. Logic 7 works properly, in that it responds to latency changes in the plug-in.