From what I understand it's a "max amount that can be hit" but not sure.
The second stage is considered as one hit regarding everything else I believe.
I've tested, and the second stage is indeed considered as 'one-hit' for all on-hit effects, which is a damn shame - I was hoping to do a hundred-fists build with a bunch of on-hit gear.
There's an exception to this (I'm not 100% sure), but from observation, one interesting thing I noticed was that each hit of the second stage does 'life-on-hit', although 1/7 of the normal value. Where this gets interesting though is that when you crit your LOH crits too.