Excellent—and I'm going to presume accurate because it has the Stink of Science™—answer from an Ask Metafilter reader about what those five bars actually indicate on your phone.
The technical term is "EC/I0" (pronounced "ee-see-over-eye-naught") and it refers to the amount of the signal which is usable. In CDMA you can have strong signal (4 bars) and lousy EC/I0 and not be able to carry a call, and you can have low signal (zero bars) and excellent EC/I0 and carry a call fine. But they can't display EC/I0 because it fluctuates wildly (it could go from zero to four bars and back to zero again in just a few seconds) and would terrify users, so they display the signal strength, which at least has the virtue of being stable, though it doesn't really mean much.
What do cell phone reception bars mean? [Ask.Metafilter.com]