Freezing a segment means the user takes a 'snapshot' of the current segment and creates a new custom segment populated with the now-static data. The group of guests contained in the new custom, frozen segment is captured on the day you freeze a segment.
The moment you freeze a segment, current guests in that segment are pushed into a custom list. Guests can still enter the original segment, but will not enter the custom frozen segment.
It is beneficial to "freeze" an ongoing segment, either for analytics purposes or if your segment has reached the desired number of guests.
A particular location is closing and you are relocating those guests (who have set them as their favorite) to a different location that is close by. By freezing the segment to the closing location you can have a copy of guests that originally selected them as their favorite.