If Add option is selected, the selected licenses will be added to the existing licenses for the selected user(s). If Replace option is selected, the existing licenses will be removed and new licenses will be assigned for the selected user(s).
When you migrate to Office 365, there in one critical element in managing your Office 365 environment and that is your Office 365 License usage, because this is what burns your dollars based on the Office 365 license plan you have subscribed to. You need to get insights on how your Office 365 licenses are being put to use. Click here to know more.