It's not an indicator of fatness, although for an overwhelming majority of people that is the case. It's simply a risk indicator. Period. It's one of about a dozen different things including family history, smoking, ect that go into to assessing heart attack/heart disease risks.
The problem is that correlation does not mean causation. It's stupid to try tie things together when there is no causal relation between them.
We know that fat can be very bad. After knowing how %fat a person is, it's reasonable to make snap judgements about potential health problems that are directly caused by fat (ie sleep apnea). This is what doctors should be doing.
Using BMI is stupid because BMI is not a direct cause of problems. People with a high BMI are assumed to be fat, which is wrong. People can have ridiculously high BMI just by being normal people. A girl I know is roughly my height but she's 20 pounds heavier than me because she likes snowboarding. Snowboarding makes her bones denser and her muscles bigger.
BMI goes in the same category as judging people by race. You are black, therefore I assume you will have heart problems. That's a real correlation. Black people do have more heart problems. It's not because they're black. It's because the black population in the US has a much higher obesity rate, and that
fat is what messes up your heart. Instead of assuming your entire medical history based on what color your skin is, it would make more sense to actually measure the fat and put you on a treadmill to see how fit you are.