If this is referring to the RT options in Unlimited mode Final Cut will attempt to play media that needs rendering to the best of your system's abilities. An orange render bar indicates that Final Cut will attempt to play in real time, but would prefer to render first. Playback may become choppy and quality may drop, but if playback is good enough to work off of this can save a lot of time.
In Safe mode Final Cut will put display an Unrendered screen for media that needs a render.
Unlimited RT is only available with compressors native to Final Cut like ProRes and DVCPRO HD. I think XDCAM formats are also good to go for unlimited RT. H.264 is a no go, but you can put H.264 on a ProRes sequence and attempt to edit without rendering.