Well to clarify a bit, it could measure the self-esteem/self-respect of your character, e.g I’ve made a great deed helping the town get rid of the local gang leader and all the town people praised me for doing so, but deep inside me I feel ashamed ’cause my motives were different of what people think.
I was paid from another gang leader to do this job so he can take advantage, but the others don’t know about this.
We aren’t talking in this case about a plain good or evil character but mostly for those who belong in the “gray” area and Fallout is full of “gray” areas.
As I said this could be a reflection of your inner self, an esoteric subject.
It’s a little complicated, as you have to take multiple instances of PC’s actions into consideration and I don’t know if it is feasible at all, but that’s how I perceive this.
Ausir you're right,the mere practical reason for implementing something like this in the game is non existent, but I think it helps to build a well round off character.