The red lines approximate cut marks. The book pages will be cut somewhere between those red lines and the edge of the page.
It is very important that text and critical image portions stay well within the red lines so they don’t end up too close to the edge of the page.
It is equally important that “bleed” images (images that bleed to the edge of the page) go all the way to the edge of the page (not just to the red lines) as any white area around the image may show on the final product.
Here is a bad example of an image that is not bleed to the edge.
Take note how the image is flush to the red cut line, but not extending beyond it. It will probably show some white space between the image and the edge of the page.
Here is a good example of a bleed image.
Here you can see the image does go beyond the red cut line, all the way to the edge. This image will bleed all the way to the edge of the page after the book is produced.