Its use in the warehouse
Quarantine separates in the system what is not yet sellable. The product can be physically in the warehouse, but it is not allocated to any pick until an authorized user releases it or writes it off. Without that status, a damaged return can ship in the next order.
How Chainlink WMS applies it
In Chainlink WMS, each warehouse has a quarantine location. Customer returns enter it and are inspected: they are restocked, kept in quarantine, written off as shrinkage or returned to the supplier. Picking allocation does not consider stock in quarantine.