The Inactive relations tab shows you the relations that you have rejected (or which relations have rejected you).
If you have disabled your friendship with any member previously, you should see the subline text You have rejected this friendship. You can reverse this by mousing over their name and clicking the icon on the right hand side.
When somebody adds you into their Inactive members, you can then see the text They have rejected this friendship. You will not be able to reverse this, it is simply to confirm the inactive relationship.