Stage 1 refers to the type of Gentoo install you are doing, your basic choices are as follows:
A stage 1 install is a system in which everything possible is compiled locally during the install process, including the so called bootstrapping of the buildchain.
Note: this is unrelated to the GRUB files /boot/grub/stage1, or /lib/grub/*/stage1
The stage 1 installation process differs from the others - apart from bootstrapping the buildchain - in that it is not officially supported by Gentoo anymore. A side effect of the complexity of the stage1 installation was a large number of bug reports; now any bug reports filed because of a failed stage 1 installation will be marked invalid. The results of a stage 1 installation can be duplicated (in a simpler and less error prone manner) using stage 3. To achieve this after having done a stage 3 install run the following: emerge -e system && emerge -e world
Unofficial stage1 how-to's
Other related installation guides
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