You have prepared spells and spell slots. Prepared spells are the ones you select in your spellbook out of combat, it's what ends up on your bar. Spell slots are how many spells of that level or lower you can cast between long rests (or short rests in case of warlocks). If you have four level 1 spell slots you can cast four level 1 spells before you need to rest. So the latter. If you have run out of spell slots, the spells will also be greyed out and usually the characters will comment that they need some rest.
