When an anti-virus or security program quarantines a file and moves it into a virus vault (virus chest) or a dedicated Quarantine folder, that file is safely held there and no longer a threat. The file is essentially disabled and prevented from causing any harm to your system through proprietary security routines which may copy, rename, encrypt and password protect the file as part of the moving process.
Quarantine is just an added safety measure which allows you to view and investigate the files while keeping them from harming your computer. One reason for doing this is to prevent the permanent deletion of a legitimate file that may have been incorrectly flagged (a "false positive") and placed in quarantine. This can occur if the scanner uses heuristic analysis technology which is not as reliable as signature-based detection (blacklisting) and can potentially increase the chances that a non-malicious program is flagged as suspicious or infected. After confirming the file is legitimate, it can be safely restored from quarantine and added to the exclusion or ignore list.
When the quarantined file is known to be malicious, you can permanently delete it at any time by launching the program which removed it, going to the Quarantine tab, and choosing the option to delete.
Malware: The Difference Between Quarantine and Delete
Clean, Quarantine, or Delete?