When several interior branches of a phylogenetic tree have low statistical support (PC or PB) values, it often is useful to produce a multifurcating tree by assuming that all interior branches have a branch length equal to 0. We call this multifurcating tree a condensed tree. In MEGA, condensed trees can be produced for any level of PC or PB value. For example, if there are several branches with PC or PB values of less than 50%, a condensed tree with the 50% PC or PB level will have a multifurcating tree with all its branch lengths reduced to 0.
Since branches of low significance are eliminated to form a condensed tree, this tree emphasizes the reliable portions of branching patterns. However, this tree has one drawback. Since some branches are reduced to 0, it is difficult to draw a tree with proper branch lengths for the remaining portion. Therefore we give our attention only to the topology so the branch lengths of a condensed tree in MEGA are not proportional to the number of nucleotide or amino acid substitutions.
Note that, although they may look similar, condensed trees are different from the consensus trees mentioned earlier. A consensus tree is produced from many equally parsimonious trees, whereas a condensed tree is merely a simplified version of a tree. A condensed tree can be produced for any type of tree (NJ, ME, UPGMA, MP, or maximum-likelihood tree).
See also Nei and Kumar (2000) page 175.