Three-Point Editing
To insert a clip from your source media into your destination track you must set three edit points.
The first two points define either the In and Out points of the clip OR the In and Out points in the Timeline that the clip will fit into.
The third point indicates either the In or Out point for the clip (if the other tow points are in the Timeline) or the In or Out point in the Timeline (if the other two points are in the clip).
A typical example: