When you choose to delete a photo, there are several options available.

Delete Thumbnails

This removes only the the small thumbnail image. Provided the photo is still available, the thumbnail will be recreated automatically when it is needed. The main reason to remove thumbnails is if you are running short of storage space on your iPad. You can select certain photos in the Map or Grid tabs and remove thumbnails only for those ones, or you can delete all the stored thumbnails on the Info tab by tapping the "Clear" button next to the "Thumbnail Storage" item.

Delete Tiles

When a photo is displayed, PhotoPhile may choose to create working copies of the photo to help it display faster. These take up storage on your iPad. Although they will be automatically cleared down from time to time, you may want to recover some of the space yourself. You can select certain photos in the Map or Grid tabs and remove tiles only for those ones, or you can delete all the stored tiles on the Info tab by tapping the "Clear" button next to the "Tile Cache" item.

Delete All

This option removes the photo entirely, including any metadata changes, the thumbnail and any tiles that have been created. If the photos you are deleting are stored in the iPad's Camera Roll, or your Photo Stream, you will be asked if you would like to remove them from there too.