What is the purpose of meta tag MSSmartTagsPreventParsing?

It disables a feature that only appeared in the IE6 betas.

Wikipedia have a good write-up on Microsoft's "Smart Tags" feature:

http://en.wikipedia.org/wiki/Smart_tag_%28Microsoft%29

As soon as the feature was announced, many web developers reacted with hostility at the thought of having their content hijacked by third parties. A lot of sites pre-emptively added the above header to their pages to disable the feature, even though it never actually was publicly released (beta only). And of course, the headers stuck around :)