Reputation points. The 'scale' between 'report a post' and 'online/offline indicator' (bottom of your info on the left) allows you to give the user either positive or negative reputation ... every 'approved' you give them is 5 points added, and every 'dissaproved' is 5 points subtracted (I might be off on that, but the general idea is there).
If it says 'unknown quantity', it means the user is at 0 points and as such isn''t neither a positive or a negative. It can also say 'xyz is on a distinguished road' or 'xyz has a shameful past' or something along those lines, and those are self explanatory.
ps. I'll give you positive rep. on your post
edit: I forgot to mention that it leaves a little comment at the bottom of your post which says if i agreed or disagreed and any possible comments I may have left to go along with that.
And if you click your own 'scale' it will show you how many points you have. And when you first enter your USER CP (top left), at the bottom it lists all the threads and posts for which you recieved feedback/reputation points.
Good God, I type a lot.
edit: to answer your original question -- that little green/red/blue dot just is an easy way of knowing who the good or who the bad guys are.