The flashing lights have absolutely nothing to do with grain loss. They are there just to let you know that all four sensors of the monitor are working. Grain loss is registered only on the meter.
Read your owners manual. It says in there that the lights are not related to grain loss. I have to agree with you that when you are having high grain loss they seem to blink faster but you can not actually judge grain loss by the lights because they are not clabrated in any way like the meter is.
I understand that the lights show WHERE the grain is being lost by flashing more or less. 1 is the left sensor and 2 is the right sensor both behind the rotor and chaffer. The calibration is to adjust the meter for seed size and total loss.