OK - I found out: This function is not a part of the latest DW update.
This change really makes getting adjusted to fluid grid layouts really difficult. I am spending hours looking for this button functionality and nothing. The resize handles don't work and thinking about reverting back to previous version.
Cloud DW is more intuitive now. Just use Insert > Div.
If the layout you're working with is a Fluid Grid Layout, DW will pick up on this and insert the appropriate tags for you.
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