In Adobe Reader preferences dialog under Page Display, there is an option "Resolution" with a default value 110 dpi. I tried to change it, from 56 to 400, and found nothing changed except zoom value. So what exactly is the purpose of this resolution option?
It's to do with the resolution of a scanned document and the size at which it is displayed on your screen. For example, a common resolution to scan documents at is 300 DPI (dots per inch), so if you had this document on your computer and wanted to view it at it's original resolution, you would select 300 DPI.
As you figured out, all it really does is change the zoom level, but for some people (especially those that work with scanning or printing a lot) it can be an important tool to judge what a physical copy of something will look like. There's more to it than that, but it's the main idea.
For most people, however, it is not particularly useful, and unless you are doing more than viewing PDFs, you probably don't need to worry about it.