This tool is specifically for MOD files only. It is greyed-out for all other file types.
Most camcorders that record to the MOD file format store the display aspect ratio in an ambiguous way. This often leads to video which is recorded with the display aspect ratio of 16:9 (widescreen) to be misinterpreted by media player and video processing software as 4:3, leading to a horizontally squeezed appearance.
This tool can be used to change the aspect ratio information in the MOD file so that there is no ambiguity. The file will then be interpreted correctly by other software. A dialog box appears where you can choose the display aspect ratio you require - either 16:9 or 4:3.
You are then prompted for the file name and location for the output file. The default file name is the same as the input file except that "-16x9" or "-4x3" (corresponding to your choice) is appended to the part before the ".mod" extension (e.g. myfile-16x9.mod).
The output file will be identical to the input file (no re-encoding) except that the aspect ratio information will have been changed to your choice.
If you want to know the gory technical details of why this issue arises with MOD files, then see this article on our web site: The MOD Video File Format.