I suggest you export a short playlist with say two or three files and look at it in a text editor. It may be that the exported playlist files directly reference the files on the device can only be used to rebuild the playlist on the device, rather than to create a matching playlist in iTunes.
On second thoughts the feature might be borked. I've just exported the m3u of "Purchased on Steve's iPhone" which has 12 entries as I look at the device but consists of the following text:
#EXTM3U
And is therefore an empty playlist file. 😟
(If the option does nothing useful it shouldn't be there)
On third thoughts the XML version makes a lot more sense. I haven't time just now for destructive testing and since my iPod is autosynced I'm not sure I want to mess with the Purchased lists.
tt2
Message was edited by: turingtest2