The referencing of "5 by 5" stands for the following combinations of Signal Strength and Readability in the sequence shown. In our example, "5 by 5" is a short form way of saying "your signal strength is strong (loud) and you are perfectly readable. It actual practice, many people state the real words (or some variation on the same theme) as opposed to using numbers. In this same case, instead of "5 by 5", one could have easily said "loud and clear" or "strong and readable", which are virtually the same as "5 by 5".
Signal Strength (Loudness)
1--Faint signals, barely perceptible.
2--Very weak signals.
3--Weak signals.
4--Fair signals.
5--Strong signals.
Readability (Comprehension)
1--Unreadable
2--Barely readable, occasional words distinguishable.
3--Readable with considerable difficulty.
4--Readable with practically no difficulty.
5--Perfectly readable.