it is in case of a failed reservation where the amount has been debited from your account and a ticket is not booked. IRCTC then refunds the amount. A payment settled status indicates that IRCTC has refunded the amount back to your banking instrument

sometimes transaction gets failed and balance get deducted but the ticket doesnt comes so in this case you should check failed transaction section there u can get the info about the settelment of your account and in failed transactions u dont see ur transaction then check booked history some times this happens that ticket gets booked but server not respond at the time of booking :)