Recreate Index

It just recreates the mySQL FULLTEXT index which is what the plugin uses to match the related posts.

https://dev.mysql.com/doc/refman/5.5/en/fulltext-search.html

You don’t normally need it, but it definitely is useful if you’ve deleted a lot of posts on your site or imported several news ones and want this to be done asap.

It won’t “refresh the thumbnails” but in some cases it might result in different thumbnails.

If you’re already using the cache option (and you should be), then clearing the cache will cause the plugin to fetch a fresh set of posts as well where possible.