The exclude button is used to keep cards out of a form delivery during the ‘Assembly’ stage. There are usually two main reasons why a card is excluded. First, the number of cards in a packet for that delivery location are wrong. For example, you may be creating a form delivery for Orange County. Blocks is suggesting that there a four cards in a packet for Orange County, but when you look at the packet you only see three cards. You can then use the link to see an image of each card, find the one that is not supposed to go to Orange County, and exclude that card.
The other main reason why people exclude a card is if there are any quality control issues that are still being investigated for that card or packet. These types of issues should be documented and communicated by the QC team with clear instructions about which packets should be excluded from delivery.