I had a similar question a while back, and turns out that this doesn't convert fisheye to rectilinear, if that's what you were hoping. I was!
Not sure if this is a bug or feature, but using the 'convert images' on a set of fisheye images, the output seems still to be a fisheye rather than rectilinear image.
Hello James,
The undistortion operation result corresponds to the selected camera type, so if the camera type is Fisheye, then you should get an "ideal" fisheye image.
I don't know what the mirroring outside the 'circle' is about though. I'm guessing the circle indicates the 180 degree 'horizon' and metashape doesn't comprehend looking backwards with a fisheye image type, or something.