This indicator is basically a switch with hysteresis characteristics. If the input voltage momentarily (or permanently) exceeds the most positive reference level, LEDl is switched on. If, on the other hand, the voltage falls below the negative, or least positive, reference level, LEDl will be switched off and LED2 switched on.
The output voltage, V0 is clamped either to the diode voltage VDI, or V m depending on which LED is conducting. For V0 to be positive, VB has to be positive with respect to the reference voltage VR; for V0 to be negative, VB has to be negative with respect to VR.