The margin is the profit (or markup) that a company earns from a sale. A discount is an acceptable amount which can be deducted from a product price.
Discounts can be applied manually to a proposal in an ad-hoc manner or they can be setup to automatically apply when a particular threshold is met. For example, you may want to provide a special discount for your customers or promote sales volumes with threshold discounts configured by value or volume respectively. Let's take the below example, when the proposal value reaches the 1000 threshold, a 10% discount will be automatically applied. This can be overridden still inside the quote, if you require.
Markups and discounts can be configured by navigating to 'Pricing Discount and Thresholds' under the Configuration menu on the Dashboard.