An RMA is a Return Merchandise Authorization. You would generate an RMA if you require the customer to send back an item in order to receive a refund.
To generate an RMA:
Enter your orders view and find the order associated with the return.
Click GENERATE RMA at the top of the sidebar.
In the slider that appears, confirm the quantity of items you want to return => Click the CREATE RETURN button
Related Reading
How to Process a Refund
How Refunds and Returns Work for Each Channel