It refers to which loads are operating in each case. For the n-0 case, all loads are turned on. For the n-1 case, 1 of each group is turned off. For instance if you have 4 pumps operating in parallel, it is assumed that only three are needed to meet process demands and one is a standby. So for the n-1 case, only three of them would be running. This probably more accurately represents the plant load.
Ii think it is related to Contingency load and not for stand by load. The Contingency load could be transmission line, transformer, capacitor bank, shunt reactor, bus section etc. and not the end load like pumps. outage of those element from power system represent by N-condition. i need more clarity in this matter.