In theory, the darbar shows the relative numbers of friendly and enemy planes in a given sector, that are above a given altitude. If the green bar is longer than the red, there are more friendlies, and vice-versa. There needs to be at least two friendly (you and someone else) for you to see the green darbar, but only one enemy is needed to see the red darbar.
There are two arena settings, which you can look at yourself, that control the darbar:
SectorCounterAlt = Number of feet AGL that enemy planes need to be above, to show a darbar
SectorCounterRange = Number of feet from a radar tower that enemy planes need to be, to show a darbar
I think the feature might have some issues, as stated earlier. I've noticed no red darbar until I've entered the same sector as the enemy. I know everyone's darbar updates a different times (seen it first-hand during FSO with my squaddies); I think it has to do with when you log in and the refresh rate of the radar on your client, versus everyone else's client.