This mode is used when the new installation and the old installation are on different hosts. In this mode, sm_migrate backs up and creates tar or a zip archive (file) of the customizations in the old installation. The tar or zip file resides in the location specified by you while executing the utility.
After running DIFF_HOST_OLD mode and before running DIFF_HOST_NEW mode, you must manually move the tar or zip archive from the old host to the new host, preferably under the directory of your new installation.