It's been a long time since I used this, and I don't remember its purpose. I think it's for writing a binary file to an EEPROM, when the chip reading that EEPROM expects the bits in reversed order.
flip_bits.py can be used on a file directly, as well, though in the context of the script it just operates on temporary files:
python flip_bits.py infile outfile
I'm sure this could be done with a very simple C command line tool instead. But hey, it works.