When restoring a previous version of a document in SharePoint, if the latest version is checked-out, it will replace the current version.
If you try to restore when the latest version is checked-in, SharePoint will create a new version.

In both cases, SharePoint display the same warning message: “You are about to replace the current version with the selected version” Some users feel that this message doesn't accurately describe the second scenario above. They suggest that a different message should be display to reflect that SharePoint is creating a new version with content taken from a previous version.