It works in a single folder only. It's actually a set of the following commands:

  - D tells mutt to delete messages by pattern
  - ~= is pattern which selects all the dupes in current folder
  - $ finalizes the command

I think this [1] is where I learned about it and there's also a handy folder hook for mutt which automatically removes duplicates when you open the folder.

[1]: http://promberger.info/linux/2008/03/31/mutt-delete-duplicat...