Two-stage heating means the furnace has two levels of heat output: high for cold winter days and low for milder days. Since the low setting is adequate to meet cooling demands 80% of the time, a two-stage unit runs for longer periods and provides more even heat distribution.
Longer, low-capacity operation has many advantages:
Two-stage heating eliminates the temperature swings associated with standard furnaces, regulating temperature to within as little as one degree of the thermostat setting.
Two-stage furnaces start in the first stage, when the amount of heat required is lower, instead of reaching full capacity all at once. That means there's no sudden "kick" or blast of air.
Low-speed operation allows your filters to capture more contaminants (because air is constantly passing through them), so you can breathe easier.
Because the furnace operates mostly in its lower-capacity first stage, it burns less fuel than a standard furnace that always runs at full capacity and shuts off when the heating demand has been met.