Replace everything throws away what is in this browser and puts the backup in its place. Merge keeps everything here and adds only the records this browser has never seen — it never overwrites a record you already have, so a record edited on both machines keeps the copy in this one.

Your connected local file folder belongs to this computer and is left alone either way.

This device and Drive have both changed since they last agreed — usually because something was edited here while another device was offline. Pick which one becomes the shared version. The other is overwritten, so take a backup first if you're unsure what's in each.