Installing Debian Wheezy recently, I was presented with several kernel options. I spotted that I'd need the dual-core kernel (686) of which I had two options: a 3.1 kernel and a seemingly generic package. I went for 3.1 (which worked) but was curious what the other option was. linux-image-686-pae seems to be a "dummy package" that will install the latest kernel, whatever it is (for my specific hardware).
I looked in the Wheezy repository and the latest kernel was 3.2. I decided to install the dummy package and sure enough it installed 3.2. I think this is something useful if you're using the testing repository or stable backports which get new kernels pretty regularly, and you're adventurous. (Not good for a production machine where upgrades have to be rigorously tested, obviously.)