Here's what AVG AntiSpyware help file says:
can i ask why select Quarantine for AVG. is there a special purpose to it?
The quarantine is a useful tool for safe storage of malware detected on the computer. All files stored in the quarantine are encrypted to make them harmless.
In most cases you will not have any reason to keep malware on your computer, therefore when the scanner detects the malware, you can delete it. However, sometimes the program detected as adware may be required by another program. Deleting any files detected as adware, which are related to a program, could affect the functionality of the application. For instance, you may have installed an application on your computer, which contains commercial supported parts that can be considered as adware. Some of these types of adware don't necessarily represent a threat. In such cases, it is advisable to move the detected adware to the quarantine; if your adware application malfunctions, you can recover the file from the quarantine.