The interpolation command will create a new data curve with a high number of points generated by interpolation of your data. The dialog box allows you to define the number of points (default value = 1000), the method used for interpolation, the interval of X-values to interpolate over and the color of the interpolated curve. In addition to the new curve in the active plot, a new table will be created containing the data for the curve.
Three interpolation methods are available. The first is a linear method. In this case, interpolated data points are placed along the straight between every two adjacent values of your data. The second is the method of cubic splines, in which case at least 4 points are needed. The last method, Akima, is a polynomial interpolation. Refer to the corresponding sections of the GNU Scientific Library for more details.