This command lets you convert a graphic file in another format (PNG, PDF, etc.) into icns format for use as a custom icon. First, it asks you to choose the image file. Then it asks you to choose a folder in which to save the icon file. DropDMG then saves the icon there with filename .VolumeIcon.icns (replacing any existing file with that name). This is the special filename that Mac OS X uses for volume icons. Because the name begins with a period, the file will be invisible. When you drag the folder onto DropDMG to create an image, DropDMG will see the icon file and set it as the icon (if you have Use custom icon for mounted image checked).