Hourglass-shaped sweaters in close, and sometimes average, fits often include some negative ease at the hips. This helps the garment anchor on your body and prevents the hem from "floating" around your hips.
However, negative ease causes the garment to stretch widthwise, and shrink lengthwise. To visualize this, grab a swatch, and stretch it horizontally. See how it gets shorter when you do that? CustomFit automatically adds length to accommodate this shrinkage for garments with negative ease.
When your sweater is worn, the hem will fall at the correct place on your body.