My understanding of using zinc oxide is to dry the area. Some people use it as a preventative, I would guess that the zinc oxide keeps surface moisture down and that would make the skin happier and more resistant to breakdown.

I personally don't use it. I use A&D cream without zinc oxide if I need to use anything at all. If I do get a saddle sore, I treat it like a wound with dressing etc. I wrote a post about this awhile back, I'll see if I can find it.