what's exactly the function of that submenu item?

sqlite VACUUM?

Exactly, this is the VACUUM command.
"The VACUUM command rebuilds the database file, repacking it into a minimal amount of disk space."

when should I use it? is there any specific scenario I should push that button?

After importing and removing a few dozens, maybe hundreds studies to and from Radiant the database file can grow (occupy too much space) and become slow due to unused data being kept (just the metadata, actual pictures are removed).
It would be a waste of time to remove them and shrink the database after removal of each individual entry, therefore those data are kept until overwritten by new study or until VACUUM is performed.
Invoking it more often then once a week/month is totally unreasonable. It makes sense if You want to copy the entire database to pendrive, You would get rid of unused data.

thanks for the clear explanation