It is easy to see the Audio Metering at work: green bars for low noise, amber bars for moderate noise, and red bars for extremely loud situations. But what exactly is the meter actually saying in terms of audio when it flicks from amber to red, for example?
Understanding the Audio Meter
The audio meter (or VU-meter) has 15 levels (15 LEDs), plus one peak indicator (red LED). Each level corresponds to 3dB. If all 15 LEDs (10 green + 5 yellow) are on, then you have the highest lever you can record without distortion (without saturation). This level is often defined as 0dB or 0dBFS.
If you go higher, then you have the red LED switching on and your signal gets distorted. When all green LEDs are on and all yellow ones off, you are at -15dB. So, having yellow LEDs on doesn’t mean having distortion, at least when using an external USB/lightning audio source.
Using the Internal Microphone
Things are more complicated when you use the build-in microphone or the analog input on the TRRS jack. In this case, there is a kind of auto-adjusted gain system which adjusts the input level depending on the input signal. This is Apple’s own personal algorithm, and the specifics to it have not been published publicly.
When using the internal microphone for your iOS device, the app displays the level after using Apple's auto-adjusting system, but it cannot truly tell if the system is distorting the signal or not.