The moderation queue holds uploads that are waiting for a moderator to review before they become fully visible.
What happens there
A moderator looks at each pending upload and either approves it, so it becomes a normal post, or deletes it if it breaks the upload rules.
Why it matters to you
Each of your uploads waiting in the queue uses one of your upload slots. Once it is approved or deleted, the slot is freed. This is what the counter on the upload page is showing you.
