There are two functions of the spacebar when reading Chinese text in the Reader:
The purpose of suppressing the dictionary display of characters and Chinese words with their meanings and pronunciations is to facilitate learning. When you recognize a character or just want to practice reading it, you should mark the character as Known. Thereafter in your reading of a Chinese article or story, you will practice to read the character when you encounter it instead of repeatedly translating it.
If you do forget a character that you’re practicing to read, just press the spacebar again. The character will be shown in the Character Dictionary window, but the Known setting will not change; it will remain as Known. To revert a Known character setting, click on the Known checkbox in the Character Dictionary window.
Much more information on using the spacebar is provided in Tutorial: Reading with Chinese Toolbox.