If I understood correctly, non-file buffers are expected to set list-buffers-directory in order to give hints as to their "current location". This is useful for instance for modes such as shell toggle  and uniquify . However Magit does not seem to be setting this at present. I think it should always be set to the top-level directory of the git repo, but I'm not too sure.
No that is not it's purpose
This buffer-local variable specifies a string to display in a
buffer listing where the visited file name would go, for buffers
that don't have a visited file name. Dired buffers use this
Variable default-directory is close to what you are looking for and it should be set in magit buffers.