The Linux installation screen offers me the option to remove all Linux partitions and to create a default layout however what does this mean exactly? Does it mean that if I have Fedora installed, it will delete Fedora and replace it with say CentOS? What if I have Windows installed and select the option?
The CentOS "Remove all linux partitions" means that it will leave intact any partitions containing filesystems that are not specifically for linux. This would leave any NTFS, VFAT or FAT partitions.
This can be useful where you have a dual boot Windows / Linux system already, and want to do a clean install of linux without affecting Windows.
It means that it will remove all the Linux partition along with Windows partition. Advisable not to use if you want dual boot you system. If you want to install Linux check out the proper method