Each component has four options for editing.
"Add Property" adds a property to the Component via the Property search bar. More About Properties.
"Change Component" allows you to change the Component to a different Component via the "Change Component" modal.
"Propagate Upstream/Downstream" will copy the component from a Resource Type to an equivalent upstream or downstream Resource Type.
"Remove Component" will remove the component from the selected Resource Type. Removing a Component will remove all the properties associated with that component.
Components are Resource Types, and must be created as Resource Types before they can be added as components to another Resource Type. More information on how to create new Resource Types here.