It includes DNS lookup, the TLS handshake, any redirects and the server's own work before it starts sending. Everything else on the page waits behind it, so a slow first byte makes every other metric worse.
Under 800 milliseconds is Google's threshold; a well hosted static page is under 200. Across our Ghanaian industry benchmarks the median was around a second, and in the UK accountancy sample it was 3.5 seconds. It is the number that most separates a properly hosted site from a cheaply hosted one.
It is also the metric a business owner can check in seconds: open the page, count the delay before anything appears at all.