In the 80s and 90s, CRT TVs used to be in the 4:3 aspect ratio.

As a result, it's actually a bit wider than tall on the CRT, and a “square” pixel was not of the exact same width and height (while now on modern LCD screens, a pixel is a square). To correct this effect some consoles like the SNES embedded dedicated hardware to slightly alter the pixel size and make it more square. This correction was a 8:7 aspect ratio change, called “Pixel Perfect”.

This menu option will enable emulators to put that enhancement in place to give a more accurate rendering of what the game was supposed to look like.

Here is a great video that explains what this option does: https://youtu.be/ssluTgfkdlg

Beware the Pixel Perfect option usually does not mix up well with bezels (or decoration in the Games settings). Typically, when you have a 1080p screen, you should disable Pixel Perfect when you are using bezels.