Normally Squid doesn’t change its current directory at startup. While this isn’t usually a problem, it can be if Squid wants to leave a core-dump file. If the core file is very large, it might fill up a disk partition. Additionally, the core won’t be created at all if Squid doesn’t have permission to write in the current directory.
This directive changes Squid’s current directory. You should set it to a location that has sufficient space, and appropriate permissions, for a large core file.
Note that the coredump_dir directive is used only when Squid starts up. If you change the value while Squid is running and then reconfigure, Squid doesn’t change the current directory.