The first quality bar indicates the minimum quality when you've selected a track with all of its streams included. So, for instance, if you select the main movie track the first quality bar will indicate the minimum quality when all of the audio and subtitle streams are enabled. After pressing the next button you will have the option to remove audio and subtitle streams you do not wish to keep. The second quality bar is thus the final indicator of the amount of compression that is needed.
So basically, it's the same as furballi already said but I've added a little bit more info