Difference between renaming a Picklist and replacing a Picklist value

Rename the Pick list Value

To rename a value, click the “Edit” link next to the value and type in the new value. For instance, to change the Lead Source value from Web to Web Page, edit the value and rename it.

Some picklists, like the opportunity Stage, do not allow editing of the name and need to use one of the other options. Also, keep in mind that changing the name of a pick list value, and that value is used in a report filter, then that report may not work as expected after the change since that value will be removed from the filter criteria or if it is the only criteria, return an error when running/editing the report.

Note: Workflow Rules using the old value may not update automatically.  These Workflow Rules may break or give errors.  Only updating the value label will not affect any automation process until we change the API of that value. 
 

Replace the Pick list Value

Another option is to create a new value and then globally replace an existing value. This is handy when combining values or wanting to keep your report filters intact using new or existing values. Since Replacing the picklist value does not delete the existing value, both new value and existing value will appear when User edits the Report filter.

When viewing the picklist values of a Salesforce field, use the “Replace” button and enter the value to replace. Then select the value to replace it with. Have any new values added before replacing existing values.

Note: This is a global change and will replace the picklist value for all existing records, including records in the recycle bin. Also, this will update the Modified By date and time for all records where the value was replaced. Replacing / Renaming a pick list value will not update the record history related list

Also, when deleting a pick list value, it does not affect existing records with the deleted value, it only restricts selection of that value for new records. This means that old records with that value does not get impacted and retain their value even if the pick list value is no longer available.
 

Related Information:

Add or Edit Picklist Values