At Admin Panel -> Settings -> Switches you have an option to enable or disable notifications of moderator actions. If the switch is on, each member will have an option in their edit profile page to select if they'd like to be notified of moderator actions. For example, when a moderator or administrator deletes one of their listings they'd get a message about it stating the deletion reason. This keeps people in the loop and ensures they know who made the decision and can easily reply if they want to ask for reconsideration.

If the private messaging system is enabled, the notification will come via PM -- otherwise it'll come by email. To edit the content of these notifications, go to Admin Panel -> Customizations -> Language and search for items where the name contains modaction_.