Since many input files must be selectable, the program has a special open dialog:
The open dialog allows to edit the filenames by hand, selecting a file via the file-browser ("File...") or allows to choose recent files from the drop-down lists. If you open the dialog again, then the current names still remain there. The third input file is not required. If the entry for "C" remains empty, then only a two file diff analysis will be done.
You can also select a directory via "Dir...". If for A a directory is specified then a directory-comparison/merge starts. If A specifies a file but B, C or the output specify a directory, then KDiff3 uses the filename from A in the specified directories.
If "Merge" is selected, then the "Output"-line becomes editable. But it is not required to specify the output filename immediately. You can also postpone this until saving.
The "Configure..."-button opens the options-dialog, so that you can set the options before running the analysis.