I'll explain it with an example.
Look at this pic.
Look at the upper right corner, that Seal Blowdowns panel.
Ok let's start then:
A full combo in Xenoblade 2 is: A lvl1 + A lvl2 (or higher) + A lvl3 (or higher)
In the picture, the first FIRE element, the one at the left, means that somebody started the combo with a Fire LVL1 special.
Then it says that in order to keep going with the combo you have 2 choices, a lvl2 FIRE special or a LVL2 WATER special.
Now look again at the pic, you see there's a prompt for Rex at the left with 3 little balls? That means Rex has his next special attack ready to keep going with the combo and the 3 little balls mean he charged a lvl3 special. See Tora at the right? They are showing you he's charging his fire special but he still hasn't reached the level you need to keep going with the combo.
Now see at the bottom? There's Nia with another prompt. That means she has the Lvl2 Water special ready to keep going with the combo but following the lower path of the chart.
Now if Rex uses his combo he will unlock the upper path of the chart, that means that you will need a lvl3 (or higher) FIRE special or a LIGHT one. You will seal permanently one of the enemy's attacks if you hit him with the finisher.