Heel fat pad atrophy occurs when the fat pad that is normally under the heel bone atrophies or wastes away. This naturally happens as we get older, but does occur earlier in some people and some people have a naturally reduced amount of fat there anyway. We need that fat pad under the heel to cushion our impacts on the ground. If that protection is lost, then the heel bone is going to hit the ground a lot harder and possibly become painful.
Apart from the usual method of pain relief with pain relief medication, the only way to fix this is to replace the fat. One way to do that is to surgically graft it from somewhere else in the body or to inject a material into the bottom of the heel. These are not bad options but does have some risks.
The most common way to “replace” the fat is with cushioning padding that you wear in the shoes. These should be of a similar density to what the heel fat pad should be. A lot of the silicone cushioning pads are of the right density.