In this case they are feeding the fish really tiny fish. You wouldn't really be able to eat the fish they are feeding the fish with practically and it wouldn't be good.
At least some of them are. Among other species, farmed fish are being fed sardines, mackerel, and a tasty fish that doesn't seem to have an English translation (it's "jurel" in Spanish).
Sources (sorry, in Spanish... it's rather difficult to find info about fish in English if you're Spanish, because we don't eat the same species, we don't even name the same species, and when we do, there is not necessarily an one-to-one map between Spanish and English names).
You are feeding fish to fish to produce fish. Of course this is not the exception as someone else mentioned:
> 95% of soybeans grown in South America are used to feed livestock in Europe, even though soy is already a complete protein and could be used