The product will be cut on the trim mark (blue line), however the cut may shift up to 1/16 of an inch in any direction.
If you wish to have colored backgrounds or images continue to the edge of the product they must continue past the trim marks to the full bleed margin. If they do not continue to the full bleed margin you most likely will end up with white strips along the edge of the product due to cutting tolerance.
The text or other elements you want to guarantee not to be trimmed off must be placed within the safe zone. If they are placed directly next to the trim mark and the cutting is off but within tolerance, the text will be chopped off.