Cure #1, sometimes called "Prague Powder #1" consists of a mixture of salt and sodium nitrite only. The nitrite keeps the meat safe for a short period of time, and keeps the meat a nice red color as well as give it that "cured" taste. This is used in products that are made and then cooked and eaten quickly like fresh sausages.
Cure #2, also called "Prague Powder #2", is a mixture of salt, sodium nitrate and sodium nitrite. Cure #2 is used on items that are dry cured over a long period of time, like salami or other cured meats. The sodium nitrate in the cure breaks down over time to sodium nitrite, which is then broken down to nitric oxide, which acts to keep the meat safe from botulism
Please don't confuse cure #1 with cure #2, they are NOT interchangeable.