The belt doesn't always mean #1 in the division, but it helps to gauge where fighters are at sometimes.
Take Serra, for example. We all know he is and never was the #1 WW in the world, even though he had the belt. However, guys like GSP, Anderson, B.J, they are clearly the #1 guy in their division, as such, they are the title holder.
There are exceptions, such as HW belt for the reason of having not even been defended yet and the LHW belt because it changes so often. If Machida gets through Shogun in the rematch, then he is clearly #1 in that division (I already think he is, but that's a whole different issue).
Fedor's belt means more than people think. Fedor has already defended it twice, against two top 10, one of whom was top 5, fighters, and his next fight could be against Overeem, another top 10. This would not work in other divisions, of course, as all the best fighters except for LW and HW are in the UFC.
So, while the belts don't always say who the #1 guy is in a division, it generally does let you know who deserves to be on top and who the best is, and who the top guys (contenders) in the division are.