The first digit has to be a one. Then each next digit can be either 2, 3, or 4.

Each next digit just has to be greater than the previous (and be from 1 to 4) unless the previous is 4 in which case the next is always two.

The tree is showing all the possible numbers. So if you trace the tree from the root (top) to any leaf node (on the bottom) and write down all the numbers you pass on the way down, you will get a 5 digit number that satisfies those rules. If you do that for each leaf node, you will get all of them.