I use green chromium oxide on leather. The rouge, or compound, or abrasive, does what it sounds like.... it gives that little extra bite to polish the edge. The whole idea is to take a sharp edge that, under a microscope, looks like a handsaw, with a ragged edge. Additionally, the sides of that ragged edge have tiny grooves and striations cause by the honing process. The abrasive compund is much finer than whatever you used to hone the edge with, and it polishes the edge, removing the grooves, striations, and ragged edges. That's the goal anyway.
The way I look at stropping is that it's just a finer phase of honing.