Snapshot consolidation is useful when snapshot disks fail to compact after a Delete or Delete all operation or if the disk did not consolidate. This might happen, for example, if you delete a snapshot but its associated disk does not commit back to the base disk.
The snapshot Consolidation searches for hierarchies or delta disks to combine without violating data dependency. After consolidation, redundant disks are removed, which improves virtual machine performance and saves storage space.
When initiating a snapshot delete action, the delta disk changes are then written to the base or parent VMDK file and the snapshot is deleted. With vSphere 5, a new option called consolidate was introduced. The purpose of consolidate is if the snapshot deletion process was not successful. In the past there were incidents where a user would initiate a snapshot deletion thinking the snapshot got deleted, yet to find out later that that’s not the case. With the consolidation option, when you initiate a snapshot deletion, if the snapshot fails to delete, the VM will then generate a warning letting you know that a consolidation is required. You would then run the snapshot consolidation option and the snapshot would get committed.