Houston54 is right. In other words, the transmission output shaft and the pinion shaft in the rear end need to be parallel to each other. In practice, this is impossible to maintain at all times, due to varying loads and engine torque. Loads will make the rear end squat, which changes the relationship. Also, torque from acceleration will do the same- plus make the axle housing twist up.
So, by nosing the pinion shaft down 2-3 degrees, some of this will average out, but you will never maintain a precise angle.
It's all a compromise....
