The thin red line is the non-smoothed value calculated from daily volumes.
The thick black line is the 7-day EMA-smoothed value.
The exchange traded and the on-chain transaction are reported by Quandl and have a 1D resolution - so it is best to use this indicator on the daily time frame.
When the value is high, it shows the the interest of traders is high and they are intensely trading BTC . When the indicator is low, it means that BTC is "dormant": it is used for transfers, but not so much for trading - traders forgot about it for a while - which may be a good time to accumulate if the economy is in a general bull market.