The answer is both--it is definitely supposed to designate an app that won't run on that particular Mac (most often a Classic app, which won't run on anything under Leopard, but also, say, an Intel-only app on a PPC Mac).
It also, as everyone is saying, definitely shows up more often than that in Leopard on Apps that have in some way changed--I think the Finder/Dock sees the half-copied app missing some of the internal files, and marks it as "broken," then forgets to mark it as un-broken once the copy completes. Or something like that.
I'm a little surprised Apple hasn't fixed this yet, but it's a very small cosmetic glitch--the apps still work fine, and as pointed out logging out and back in will fix it.