I downloaded a mod and then took out a pbo that was in the addons folder mod from the Arma 3 Folder. I then retried to re-download button. It did not "fix" the addon by replacing the PBO at all. I then deleted both copies from the Arma 3 folder and the workshop folder and re-downloaded the mod again. I then tried again and this time it caught the missing mod and then added the missing mod.
To take it one step further, I went into the Workshop Download folder and deleted the pbo from there and then retried the re download option. It did not update at all.