Judging by the three completely different answers posted above, I think it's fair to say that food is one of the classic
UO mysteries. I have never seen any evidence as to what food actually does, besides the obvious restoration of stamina, but I've heard many times that it affects this, or improves your chance to do that, and so forth.
I remember when there was a much bigger market for pets (nightmares, dragons, etc) and it was thought by some that food helped when transferring the pet (especially to a lower-skilled tamer).