The Setup->Lock Windows menu item is a toggle of the lock/unlock state of the Files and Directories windows. If the item is checked, the windows are 'locked' such that the size or position can not be modified by dragging a border. However, the reset functions will both size and reposition the windows to their default values.
The purpose of this option to to prevent users from accidentally modifying the size of any internal window with mouse usage (yes, it does happen).