If you only take the bottom (lowest) 1% of all frame rate measurements (and average them)

I don't think that is the methodology. I think it is taking the 99th percentile frame time. So basically if took the time it took to generate every single frame this is the time that 99% of frames were faster than and 1% were slower than.

If this number goes down it means that the worst frames are less bad. This is a pretty important part of the experience as even if you have good average frame time (and decent FPS) having a few slow frames really makes the game feel choppy and can make precise inputs difficult.