Basically, Facebook has deprecated the old Connect code, and it will stop working after October 1st. So what the "old version" did is irrelevant, since it won't work anyway.
The Grant Permission button will pop up that window, allowing you to grant the permissions. It doesn't cause a refresh, it just does the authorization. When you click Save, the backend code talks to the Facebook Graph API to get the access tokens. When it has them, then those lines turn green. If it can't get them, or you haven't authorized it, then they won't turn green. They're dummy lights, basically.
Until you can figure out why your server can't talk to the Facebook Graph API, publish just won't work.