With the following configuration:
System RW
Wheel R
Everyone No Access
You are both simultaneously granting permission and revoking permission,
Not really. POSIX permissions can only be granted, not denied. None of those are Acess Control Entries (ACE), which would be part of an Access Control List (ACL). ACEs can both grant and deny access, but are in addition to POSIX permissions, which is what you are describing.
Given that the example you used was a directory (root's home), it would have the following permissions:
rwxr-x---
Nothing is denied there. root, the owner (user), is granted read, write, and execute permissions; members of the group, "wheel" are granted read permissions, and all others are not granted any permissions. I suppose you could consider that as being denied, but that is the unix default: deny all, grant to the minimum necessary.
Each three letter group above is the permissions for the Owner, Group, and Other (Everyone), respectively.
System, which is root, is the owner (refered to as user in chmod) and has rwx permissions.
Wheel is the group and has r-x permissions.
Everyone, which is other in unix, is not granted any access.
The owner, root, has read, write, and execute (read the directory contents).
Members of wheel, which includes root, can only read and execute.
All others can neither read nor write nor execute.
If you were to share that directory using the File Sharing sys pref, you might attach an ACL to that folder, which would trigger the, "ACL found but not expected" note in Repair Permissions.