For those who want the short answer:
Rich means either too much fuel or not enough air.
Lean means either too much air or not enough fuel.
Take your bike to a shop with an experienced mechanic and have them tune it for you, fine tuning a carb isn't something a novice should do. Okay, now that we're done with the short answer, it's time to go into more detail. This is the time where you break out the caffeine, no-doze and all the other anti-sleep aids.
Air needs to be balanced with fuel:
Before we go into this entire rich/lean topic, we have to understand the basic operation principle of the engine, which requires a certain amount of air to a certain amount of fuel. We call this ratio the "stoichiometric ratio". Without getting too technical, it is about 14.5 parts of air to 1 part of fuel (14.5:1). Nobody that I know of tunes their jetting/carb to be at this ratio, in fact it's common to find engines to run anywhere between 11:1 to 14:1.
a. 11:1 is more fuel than 14:1 because there's less air per volume, hence it is richer.
b. 14:1 is thus leaner than 11:1 because there's more air and thus less fuel per volume.
So far sounds simple enough right? Basically there's only so much volume of fuel that can be mixed in with a volume of air at any given time.
Enter 2 stroke oil
Okay, now that you think that all that matters is adjusting the fuel to be proportional to the air going into the engine, 2 stroke oil adds another issue that directly affects the air to fuel ratio.
I want you to imagine an empty bucket, with a permanently sealed 1 liter plastic bottle inside filled to the top with fuel. The bucket represents the total air volume possible in a given situation. The sealed bottle inside represents the amount of fuel needed to achieve a good air to fuel ratio (stoichiometric ratio). When we introduce 2 stroke oil, it doesn't affect the air volume, it affects the fuel volume.
You might be asking "why is the fuel bottle sealed"? A sealed bottle has a limit to its capacity. The orifice of the jets are a set size, therefore there's a limit to that jet size's capacity to provide fuel. When you replace a smaller jet with a bigger jet, what's happening is that you're replacing that old sealed bottle with one that is larger. The empty bucket doesn't change.
When you add 2 stroke oil, it goes into that sealed plastic bottle, so naturally since there's only so much liquid that can fit in that bottle, by adding oil some of the fuel has to get dumped to make room for that oil. Therefore, for those who use richer oil to fuel ratios (32:1 is a richer oil to fuel ratio than 50:1), you're displacing more of that fuel with oil. Now in relation to the bucket, you have less fuel to the same amount of air because the oil took some of that fuel away.
>>> !!! PROBLEM !!! <<<
Now we have a bottle that has less fuel that we need because some of the fuel got replaced with oil, this is a lean condition, what am I supposed to do? How can I replace the lost fuel and keep the amount of oil I intend on using?
So what can we do?
Let's just say for the sake of this example that 20% of that plastic bottle is oil, the other 80% is fuel. The total ratio requires 100% fuel to achieve stoichiometric ratio. There's no more room for fuel in that bottle, so what we need is a larger bottle that'll allow us to restore that 20% of fuel we lost. Using a larger jet or moving the needle clip down will accomplish this. By using larger jets, you increase the capacity, just like how it would by using a larger bottle. This is why a bike that uses more oil will tend to use larger jets than one that uses a lot less oil.
All things being the same (assuming using the same engine and oil), a bike jetted for 50:1 will definitely be using smaller jets than one using 20:1 oil to fuel ratio.
Spark Plug Reading
Many folks use the traditional 4 stroke method of reading spark plugs to determine rich or lean conditions. I seriously advise against it. I'm sure you hear from a lot of folks that you need to find an open stretch of road so you can hold it full throttle for 1/8 to 1/4 mile then cut the motor ensuring not to let the engine idle down, then you pull out the spark plug and look at the insulator's color. This is wrong.
1. The color of the insulator can be affected by the type of fuel and oil you are using. You can have an overly rich condition at wide open with a white porcelain insulator.
2. A brand new plug will not have time to develop enough deposits to turn into the correct color.
3. Your jetting could be right on the nose, but you might be using a spark plug with too hot a heat range. The color of the insulator nose will result in a whitish color. It'll make you think that your jetting is lean so you'll end up making things rich.
4. Your jetting could be very lean but your spark plug's heat range may be too cold. The color of the insulator nose will result in a chocolate brown color making you think that everything is ok.
MIXTURE RING
It's not easy to see where this is but here's one in addition to losthope's. The mixture ring is also known as the black soot ring. This is where you are supposed to look at when jetting your bike correctly. The black soot ring (mixture ring) will be thicker as it is richer, sometimes darker in color. If there's no soot ring or it's very thin (less than .5mm in thickness), it's lean. An engine that's tuned too rich will have a very thick soot ring while a well tuned engine will have a nice .5mm to 1mm ring).
Mixture Ring

Mixture Ring Diagram (Black Soot Ring)
