In a nutshell:
Section 1 termite includes the cost of remediation, like tenting or spraying to eliminate an active termite infestation. It can also include repair of dry rot or wood that has been chewed by termites. A clear Section 1 means the sellers have received clearance of no more active termites.
By contrast, Section 2 termite refers to items that are not problems now, but if left unattended, might become become a problem later. Additionally, this includes anything considered termite prevention.
Does OL recommend a termite inspection?