its nothing but power of the engine
The total size of the engine, which is also called engine displacement is expressed in terms of Liters (1.2L, 1.4L, 1.6L, etc.) or cubic centimeters (cc). Assume a car like Swift which is 4-cylinder engine. This means there are 4 cylinders which make up the engine. Each cylinder has the volume of 0.3L, which means there is 0.3L volume space for piston movement. This also means that there is 0.3L volume space for fuel-air mixture inside each cylinder. As there are 4 cylinders, each of 0.3L, this leads to total of 1.2L engine capacity.
Related to power? Yes, partially. More capacity engines means more amount of fuel is burnt and more performance is obtained.
P.S: 1L car has 1000cc engine. Similarly, 1.2L = 1200cc, 1.4L=1400cc ...
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