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What does the "delivery margin" field on Zerodha Kite mean?

The delivery margin is blocked when you sell securities (20% of the value of stocks sold) from your demat or T1 holdings. As per SEBI's new peak margin norms, only 80% of credit from selling your holdings will be available for new trades. The funds blocked under this field will be available from the next trading day. 

Assume you have sold 50 shares of ZEEL at Rs 211.15. The value of holdings sold is Rs 10557.50 i.e. 50 x 211.15 (ignoring charges).

Out of the Rs 10557.50, 80% credit (i.e. Rs. 8446) is available as a negative balance under the used margin field. You can use this negative used margin for other trades. The balance 20% credit (i.e. Rs. 2111.50) is blocked under the delivery margin field as shown below:

The delivery margin also includes additional margin blocked if you have any F&O positions due for physical delivery