There are 2 coloured cycles (waves) in this diagram, the blue represents the note you will tune to (6th string, 5th fret), the red represents the note you are tuning (5th string open). When two notes are played together and they are slightly out of tune with each other, the cycles interact and produce a beating sound. As you bring the strings into tune the beating effect slows down until it stops. When it has stopped the two notes are in tune with each other.
1 = the note being tuned to
2 = the note being tuned