It is more of an "activity meter" showing Audio Output Level. When the PART is actively sounding you will see 'activity' in that meter. Its purpose is to indicate when a particular PART is sounding - sending audio to the output. IIt is a meter to show you when sound should be outputting from a PART. (If you MUTE the PART the meter disappears).

However, if you pull the fader all the way down the meter only disappears when the PART has no other way of outputting its audio. If, for example, the PART VOLUME parameter has been biased to another controller (other than the Slider), then the Meter will show signal flowing through the PART to the Output. The height of the meter is related to "how much" or "how loud" that PART is currently in the mix compared to its neighbors.

The Green-Amber-Red paradigm comes from traffic lights as "you're cool", "you're approaching a warning", "you should really stop"
The Activity Meter here is actually Green-Amber-Orange (because "Red" is associated with clipping and this does not indicate Clipping).

Interesting, BM! I've never seen an orange bit - which would indicate overdrive per se? - though there is often quite long yellow bits relative to the green that does vary with velocity, which makes sense. Very often getting them all about the same doesn't work well at all. Some types of sound dominate the mix, or it doesn't 'sit' right - I prefer tapping the volume box and using the data wheel/buttons rather than the sliders - the sliders are often more convenient, but my left hand doesn't like that action! Bit like patting your head and rubbing your tummy at the same time ... I like the concept of 'activity' rather than just 'volume' - it makes better sense to me, so I'll think that way in future. The two are loosely related, but by no means linked. Enlightening, as ever ...