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1.
This phrase is used for clarification, however it is commonly unnecessary. People using this phrase either show complete dominance over whomever they may be talking to OR if used incorrectly, this person will exemplify the definition of douche bag or tool.

The difference between correct and incorrect usage is very subtle and may depend on many variables such as delivery of the phrase (timing and vocal inflection), the person delivering the statement (the more nerdy/gay the worse), and the appropriate usage is important as well.
Correct Usage:

Me: "So Ryan, you need to wash your fucking dishes because the kitchen smells like shit... you understand that, right?
Ryan: "SIR YES SIR!"

Incorrect Usage:

Ryan (nerdy/high pitched voice and heavy breathing while simultaneously stuffing his face with Cheetos): "If you don't wash your hands before you eat you could contaminate the forks, dishes, and even the food! Oh my God that would totalllllly ruin supper, you understand that right?"
Me: "Shut the fuck up, pussy."
by Jimmy Bay February 05, 2010