The Morning Readiness gauge indicates your state of relative balance. In other words, it is comparing your HRV values to your recent past and telling you whether your Autonomic Nervous System (ANS) is in a similar state or if it is swinging widely outside of your norm.
A higher HRV is generally a good thing, but there are exceptions which the app picks up on. You want your HRV to gradually increase over time (weeks, months, years). If you have taken a few Morning Readiness readings, you know that your HRV can go up and down slightly from day to day. This is normal and generally healthy.