What does this equation mean?

This reach is the approach’s defining strength and its defining limitation is spatial resolution, which is fixed by the physics of diffraction rather than by mission budget. For a telescope with aperture diameter D observing light of wavelength $\lambda$ , the smallest angular separation it can resolve is approximately $\theta \approx 1.22\,\frac{\lambda}{D}$. This relation is why an exoplanet studied by transmission spectroscopy is a single point of light with no visible surface at all — the target subtends an angle far smaller than $\theta$ for any existing telescope, so every observation is necessarily a disk-integrated average over the whole illuminated hemisphere. Even for solar-system bodies, where $\theta$ is far less limiting because the object is millions rather than trillions of kilometres away, ground- and space-based telescopic resolution still translates into surface features tens to hundreds of kilometres across at best — enough to map a hemisphere’s broad geology or atmospheric bands, not enough to identify an individual boulder or a stratigraphic contact. Remote spectroscopy therefore answers global and atmospheric questions extremely well and answers local, geological questions not at all. It is also, mission for mission, the cheapest of the four approaches per object studied, since one telescope can observe an effectively unlimited number of targets across its operational lifetime rather than being committed to a single destination.