Wipe will drag the nozzle an extra distance over the extrusion just laid down with the extruder off to help "wipe" the nozzle to avoid stringing. The wipe distance is how long you want it to overlap the previous extrusion.
Wiping usually occurs after the retraction. However, there is also an option on the Advanced tab to perform the retraction during the wipe movement. In that case they happen at the same time.