It works the lower part of the upper back, where your lats insert to your waist. they als work the serratus muscles. you know those fingerlike muscles under your pecs. I only do them on occasion though.
If my understanding of kinesiology is accurate, when the hands are using this type of grip where they face each other, this puts the elbow flexors in their most advantageous position to pull.Simply said, it makes it easier to do more reps or with more additional weight than if you were to do a supinated or pronated grip chin.
With the biceps story I'm with you but for lats man, that's one huge muscle. If you change the grip you use you for sure will change the part of the lats you use. I'm certain of that.