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TortoiseMerge has several different uses:
Viewing the difference between two files and merging changes into one of them, or removing unwanted changes.
Editing conflicts between local changes and changes in the Subversion repository following an update.
Applying patch files and reviewing them.
In this mode you are comparing two files. The file in the left pane is considered to be the original file (sometimes referred to as Theirs, and the file in the right pane is the modified file (sometimes referred to as Mine.
You can make simple line-based changes to the file in the right pane which include:
Reverting changed lines back to the text shown in the left pane.
Using a combination of both blocks, either Theirs before Mine or Mine before Theirs.
You can also edit the file in the right pane just as you would in a text editor. Such lines are marked using a pencil icon. Please note that if you want to make any of the line/block-based changes described above, it is better to do those first since once you start editing the file yourself it becomes impossible for TortoiseMerge to keep track of the relationship to the original files.