The 'Exclude recipients from previous mailings' function is used when you don't want a campaign going to certain individuals who were sent a previous campaign. For example, if you sent out an email to an individual segment and decided after that you wanted to send out that same email to everyone in your list. You could choose to exclude the recipients from the previous email that went to the segment and the email campaign would go out to everyone on your list except the people included in previously sent email.
To use this function in a new campaign or an existing draft campaign, click the recipients tab, click 'Choose Mailings' next to the 'Exclude recipients from previous mailing' box. From there, you can choose a mailing or mailings to purge recipients from your new campaign.