What does this equation mean?

Only one step in the loop carries information, so it deserves the arithmetic. Projection lithography is an imaging problem, and its resolution obeys the Rayleigh relation $R = k_1 \frac{\lambda}{\mathrm{NA}}$. where $\lambda$ is the exposure wavelength, $\mathrm{NA}$ is the numerical aperture of the projection optics, and $k_1$ is a dimensionless process factor absorbing illumination scheme, mask engineering and resist behaviour. Two-beam interference sets a hard floor: for a periodic line-and-space pattern the smallest printable half-pitch is $\lambda$ / (2\,$\mathrm{NA}$) , which is $k_1$ = 0.25 in the convention where R is a half-pitch. Everything the industry calls resolution enhancement — off-axis illumination, phase shifting, optical proximity correction, inverse lithography — is an attempt to drive $k_1$ down toward that floor without printing garbage.