Parent/Child pages

Using the new menu system, as far as I know I can set a page which is
actually itself a child page (in the pages section) to be a parent of
a page which is actually itself a parent=
TRUE

What is normaly done on a site that doesn’t use wp_list_pages?
I can’t speak for all, but I do just as you mentioned. I order the menu myself. If you don’t need to manually arrange your sites menu and you find the wp_nav confusing you’re probably better off using wp_list_pages for you menu, and using the page order in the Edit Pages screen to control your menu order.