If you never click on the prompt to archive items because you don’t know what happens next, you’re not alone. It just creates another .pst file, which is visible below your main set of folders as Archive.
To customize when and how items are archived, click the File tab and choose Options. In Advanced, locate the AutoArchive Settings… button. Choose how often you want items archived, whether you want a prompt and where the Archive file is located. Once you set up these options, right-click on an individual folder and choose Properties to set unique archive settings for that folder.