It was bit better explained in the book: Renfri and her cronies were planning to murder the whole village to get Stregobor out:
[Refnri]: “Who knows, witcher, who knows. There are arguments which cannot be opposed or resisted, there are also
offers which cannot be reject. Among these there’s for instance the Tridamian ultimatum. I will offer him Tridamian
[Geralt]:“What is such an ultimatum?”
“My sweet secret.”
“Let it be. Yet I doubt if it’s going to be effective. Stregobor’s teeth chatter, when talking about you. An ultimatum,
which would convince him to surrender of his own accord into your beautiful hands would have to be a mighty one,
indeed. Let us then proceed to the other person who can prevent carnage in Blaviken. I shall try to guess who this
Later we find what the "Tridamian ultimatum" is:
[...] “In Tridam. You haven’t heard? It was common gossip about three... Well, yes, must have been three years ago,
for Marilka was two then. The Baron of Tridam kept some thugs in his dungeon. Their companions, they say that that
cur, Civril, was also among them, they captured a river ferry teeming with pilgrims, it was at the time of Nis Festivity.
They sent to the baron demanded liberation of those. The Baron, as was to be expected, refused, and then they
started murdering the pilgrims, one by one, one after another. Before the Baron yielded and released those from the
dungeon, they let more than ten go down with the current. Exile, or even the block loomed over the Baron, some
were vexed by the fact that he yielded only when so many had been killed; others were agitated, claiming that he had
done a great evil: that it was a pre... precedent or what, and that those should have been shot down with crossbows
together with the hostages, or be suddenly assaulted from boats, and he should not have go even an inch their way.
At the court, the Baron maintained that he chose the lesser evil, for there were over a quarter of a hundred people
on the ferry: women, brats...”
“The Tridam ultimatum.” witcher whispered. “Renfri...”
In the movie, it is a bit more vague:
[Renfri's goon]:She's at the tower with your little friend, Marilka.
She gave us a message to pass on to you.
You have to choose the lesser evil.
It's an ultimatum.[...]
[Renfri]: I will kill her.
I will kill everyone here until Stregobor comes down.
Now, if you're asking why did he choose to kill Renfri rather than Stregobor - well.... the thing is, Geralt wasn't really planning to kill Renfri - he wanted just to stop her. He didn't want to be a murderer but also wasn't going to stand idle and watch the whole village to be slaughtered in the name of vengeance. Since Renfri didn't stand down and chose to fight, he had no choice but to kill her.
Leave Blaviken.It's not too late. If we cross swords - I won't be able to stop.
Again, in the book it is bit more clear:
“You have made a choice,” she declared. “You sure it is the right one?”
“There will be not another Tridam here,” said Geralt with effort.
“There wouldn’t be one. Stregobor jeered at me. He said I could slaughter all of Blaviken and add a few nearby
villages, and yet, he shall not leave the tower. And he shall let nobody - you included - in. Why are you staring like
that? Yes, I have cheated you. I have cheated throughout my life, if there was a need, why should I have made an
exception for you?”
“Go away from here, Renfri.”
“No, Geralt,” she unsheathed her sword quickly and smoothly
“No, Geralt. You have made your choice. Now, it is my turn.”