Read Only means that you can watch a movie, but you can't edit it. If you set to Read+Write it means that the movie will be overwritten with new inputs. Warning: make a copy of the movie file before using Read+Write.
If you play the TAS file back to the point where you want to continue editing from, you can switch to read+write mode, then make a save state and then load it.
Assuming you have a movie loaded:
If the emu is in read-only mode, and you load a state, if that state is from the movie it will load it and start playing back the remaining input from the movie from there.
If the state is not from the movie, the emu will decline it.
If the emu is in read & write mode and you load a state from the movie, it will load it and record new input starting from there.
If the state is not from the movie, the emu will decline it. (Notably, old VBA-rr had a bug which caused the movie to switch to recording anyway, causing the movie to break)
Always make a backup of your TAS movie files. It is not nice to work on a movie for weeks and lose all your work by mistake. This happened to me like once or twice in my early days.
