Foot length, physical inseam, torso length, arm length and shoulder width are all the very basic measurements used by the fit kit system in helping determine the following things...
center to center seat tube
saddle pedal start
top tube and stem length combination options
bar width and drop
From there, I'll put the person up on the trainer and use a plumb line to check the knee position over ball of foot with cranks at even. One can also measure things like length of thigh and such, but for a bike shop bike, most riders will get a superior fit just based on simple stuff. People are always really happy with how their bike fits when we are done.
I don't know the exact formulas that fit kit uses to come up with the numbers, but it is usually pretty much right on for most people. Interestingly enough, Richard Sachs tells me that the person who designed this system is a math teacher in NH and once was a rider for Sachs.
Personally, I find the fit kit recommended saddle pedal start, which indicates a range of a few centimeters, is just right. My "by feel" chosen seat height, is in the middle of that range. Top tube and stem is generally a good recommendation and the seat tube center to center is right on the button with what I like.
I do have to kind of adjust everything for compact frames, but for traditional frames - the stuff we ride, its great.
There are individuals, like a certain character that comes into my shop (not you Mack <g>) who is convinced he needs to be riding something like a 58 cm frame. That'd be fine, but he is like 5'8" and pretty evenly proportioned between inseam and torso. His saddle pedal start is so high he must be dropping his hips really badly - he cannot be convinced that he might need to be more reasonably sized down and be more effective as well as comfortable. I did his fit kit and he argued with me that it couldn't be right. I smiled and said, "well a computer program cannot always account for the unique attributes of an individual" and went on to someone else.
As both a bicycle salesperson and a fan of fine bikes, I swear by the fit kit system. I've been fitted by other systems like the Serotta system, but I've learned the fit kit system, and understand a little more of how it works so I'm pretty happy with it.
Ann Phillips, Atlanta Ga