It makes sense to me. I'm not sure what you intended your logic to be, but it's a little confused at the moment. Try this:

if($pid > 0) { #we forked successfully
    $npids++;
    if($npids>=$MAX_PROCESSES) {
        my $wait=wait();
        if($wait) { $npids--; }
    } elsif(undef $pid) { # we didn't fork successfully
        print "fork error!\n";
    }
} else { # $pid == 0, we're a kid, so what do we want to do?
    &doit($_);
    exit(0); # free this pid
}
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The first time through your loop, $npids is less than $MAX_PROCESSES, but $pid is defined (both in the parent and in the child), so it takes the third option. The parent (!!) goes to do_it(), sleeps for five seconds, and then exits. Oops.

I figure you probably want the children to exit. The one good way of telling the parent from the child is the value of $pid. If it's positive, you're in the parent. If it's zero, you're in a child. If it's undefined, the fork failed. (I'd move the failure code to the fork() statement.)

I can't figure out where AgentM got his comment, though. There's nothing in the newest edition of Programming Perl about wait being deprecated, and waitpid takes a different approach.