I will admit that this discussion did come up back in December when I first coded hunger in. In the end we decided that, since pretty much every game we've played that involved a hunger system has it start at full and decrease over time, that is the system we would use. I suppose I could have called it satiation, it just feels like more cumbersome of a word than I really needed.
Hunger doesn't do much yet, no. The systems that are in place are shoddy and will be replaced eventually. Hunger causes you to gain body/part size randomly when it's above a threshold, and lose those sizes when its below a threshold. It also causes damage to you any time you hunt or explore when it's at 0.