Before doing a Deployment, this feature allows you to see what impact the deployment will have on the target org. From a Deployment, the "Impact Analysis" button can be clicked and the target org selected. You can see what components are the same, which are new and which are different. The difference between the component version in the Deployment and the one in the org can be viewed and decisions reached if a merge is needed before deployment.
Please refer to the screenshot below of the Deployment screen from which the Impact Analysis feature can be initiated.
Clicking on the Impact Analysis button gives the following screen. Here we can see components in the Deployment segregated into 3 types:
1. Components that are exactly the same between the Deployment and the Org on whic hthey will be deployed.
2. Components that are in the Deployment but not in the target org.
3. Components that in the Deployment and the target org, and are different.
The View Details button can be clicked to see what the difference is between these components.
Clicking on the View Details button, allows us to see the difference between the 2 versions of the component. Please see screenshot below.