This is a context menu option available while comparing two files. If you right-click within the pane for either compared file the context menu appears with this option. Selecting this option will cause a prompt to appear showing the full path of the active file to confirm that you do wish to delete the active file. If "yes" is selected the file will be deleted and will be removed from the active compare pane. If "no" is selected the prompt dialog is dismissed and focus returns to the active document pane.