This is information on what the LED's mean on the APM 2.0

Alternating RED & BLUE LED: APM Booting

Flashing BLUE LED: Acquiring GPS Fix

Steady BLUE LED: 3D GPS Fix Aquired

Flashing RED LED: APM Disarmed

Steady RED LED: APM Armed

YELLOW LED?

Steady GREEN LED: APM Power

Flashing ORANGE LED's: Data Transfer

How to arm the APM: Hold your throttle stick down and to the left for 5 seconds the red led should stop flashing and go steady. This important because every time you arm the APM it causes the barometer to be reinitialized (i.e. resets the current altitude to the home altitude).