If control by retracting tool along tool axis is selected, then the gouge is avoided by retracting the tool. The resulting toolpath is then gouge free. Another line connects the calculated tool position before retraction and the surface point used for calculating the tool position. Actually this surface point may indicate remaining stock, because there is a surface area that ought to be machined but after retraction it is not. You can turn the find and report option on and off.
Here you can see the tool retracting along the tool axis.