When the Reset Application (on Android), Log Out (on iOS) or Reset (on Desktop) option is selected, it will reset everything and log the user out. It will also wipe out all data associated with the app locally for example, clear all data including theme, preferences and calls history (from application only). This does not affect Contacts as those are stored in the phone contact list.
The user will need to re-enter their login info and application preferences/permissions the next time they log in. Defaults will be applied once logged back in. Only the previous message history will be reloaded.
