It means how many seperate video files you can process at once. For example, a system that can handle five video streams can do a preview of video footage with four picture-in-picture effects on top without needing to render.

1:1 means uncompressed video footage. That's the ideal way to edit, but takes up lots of disk space and needs fast disks.

MarkG, thanks for the epxlanation. I guess that explains why when I add more effects or video tracks to the timeline, the preview gets slower and slower and finally I have to render. I thought this has to do more with the power of the PC and not the video editing software.

If 1:1 means uncompress, is that mean avi files are less compress than mpeg files? The reason I ask is that if I import mpeg files into my timeline, all of the suden previewing is almost impossible. But if I use avi files then previewing is at a much better speed.

Usually, yes. But some .avi codecs use higher compression than MPEG-1 and MPEG-2: DiVX, for example, gives a similar quality to MPEG-2 in maybe a third to a half of the disk space.