The Execute Condition field is evaluated before running the action. If the condition evaluates to True (or is empty) then the action will execute, otherwise the action will be skipped.
Execute conditions are specified in a scripting language, so %'s are not used when referring to FinalBuilder variables. For example, if you have a FB variable "PerformMerge" then you can simply specify PerformMerge and not %PerformMerge%. In the example above, previous actions should have set the PerformMerge variable to either True or False.
Here is another example of how to use the Execute Condition property:
BuildType = "Full"
BuildType == "Full"
$FBVariables.GetVariable("BuildType") -eq "Full"
where BuildType is a FinalBuilder variable.