The Contour interpolation tool is located in Contour Generation section of the VOI tools panel.
Its purpose is to allow ROI definition on a few slices and interpolate the ROIs in between as illustrated below.
To perform an interpolation, first select the VOI in the VOIs list, then activate the Contour interpolation tool. The resulting VOI replaces the original VOI.
Note: The interpolation only uses the contours, not the image itself.