When you are cloning from a domain to root of another addon domain you can leave the "In Directory" field blank. This will clone the files to addon domain you choose in the "Choose Domain" dropdown.
But if you are cloning on the same domain you should enter something in the "In Directory" field to clone the installation into a sub directory of the same domain.
In either of the case if the files already exists Softaculous will trigger an error that the files already exists and will not overwrite the files unless you choose the "Overwrite Files" check-box.