The Apply Lag is a description of how far the Standby is behind the Primary. What will it take to get the Standby up and running if you loose the Primary?
The thresholds of this alarm should align with your business requirements for Recovery Time Objective and Recovery Point Objective.
The thresholds define various states of alarm for how far the Standby is behind the Primary in minutes, taking into account any delay you may have specified.
As an example, depending on your business objectives, you may choose to specify an hour delay between the Primary and Standby. Logs delivered to the Standby are delayed an hour from being processed on the Standby. The Apply Lag Alarm takes this time into account. You should factor in the amount of time it will take to process the buildup of logs on the Standby in the hour you have to replicate the Primary on the Standby if the Primary is corrupted. What can you afford to loose and how much time will it take to get on line again? These are issues to resolve in setting the Apply Lag Alarm.
For more information on Recovery Time Objective (RTO) and Recovery Point Objective (RPO), refer to the Oracle Database Help Center.
Note: In Oracle versions prior to 11.2 some configurations experience inconsistent or misleading data on the Apply Lag. This is documented as Oracle Knowledge Article [ID 1299000.1].
An Example Scenario: The flow from Remote File Server to Standby Logs to Apply Server to Buffer Cache to Data Files shows no reason for alarm so you would expect the Apply Lag to be low, but the Apply Lag is increasing in contradiction to this. The Apply Lag data is misleading. Disable the Apply Lag Alarm and use the Outstanding Logs To Apply Alarm to check for bottlenecks.