Candidates are disqualified from consideration when you click the red button on their profile.
When a candidate is disqualified they move to the Disqualified tab for that stage.
The candidate will not know that they are disqualified until you notify them and can be reverted to Qualified at any time. Click the green button to revert them.
If you have a lot of disqualified candidates, try emailing them in bulk to let them know that they won't be proceeding.