Since many input files must be selectable, the program has a special open dialog:
The open dialog allows you to edit the filenames by hand, selecting a file via the file-browser via the button or allows you to choose recent files from the drop-down lists. If you open the dialog again, then the current names still remain there. The third input file is not required. If the entry for C remains empty, then only a two file diff analysis will be done.
You can also select a folder via the button. If for A a folder is specified then a folder-comparison /merge starts. If A specifies a file but B, C or the output specify a folder, then KDiff3 uses the filename from A in the specified folders.
If Merge check box is selected, then the Output line becomes editable. But it is not required to specify the output filename immediately. You can also postpone this until saving.
The button opens the settings dialog, so that you can set the options before running the analysis.