Intel Hex is just a way of representing Binary data in a text-only format; it was invented in the days when it couldn't be guaranteed that communications links (eg, the serial link between a computer & a PROM programmer) could handle binary data.

In the PROM programmer case, the programmer must convert from Intel Hex back to binary so that it can then blow the binary data into the PROM.

In the case of an 8051 with FLASH attached, the 8051 must do the conversion from Intel Hex to Binary before in can blow it into the FLASH.

All clear now?