It must be understood that wave forecasting is not the observation of a single wave train. It must be considered from an average and statistical point of view.

Here is how ECMWF explains waves modelling:
“Our wave prediction system is based on a statistical description of oceans waves (i.e. ensemble average of individual waves). The sea state is described by the two-dimensional wave spectrum which gives the distribution of wave variance over different frequencies and propagation directions.”
With detail of the significant height of waves:
https://codes.ecmwf.int/grib/param-db/140114

In Windy, Waves is the sea state as predicted by the wave model i.e. the forecast of combination of the different swells and the wind waves. Its height is the significant height as it is predicted at that location.
At a location the sea state (also called the total sea ) is the waves as you can observe them.

I'm not convinced of your explanation as waves from different wave trains do not create a single wave train that is a combination of the speed/direction of the separate waves (the way apparent wind is a combination of the wind created by a moving boat as well as the true wind over the earth.

A 3 meter swell with a a 1 meter wave height from a different direction creates waves that cross and sometimes add and sometimes subtract in height.

If the waves row is simply adding the swell to the wind waves then it is completely useless data as that just isn't how waves work. And the direction is certainly wrong.

I really have no idea what the "Waves" row is referring to in the screen shot above. Can anyone explain?
Very confused.
Thanks,
Bruce

Your screenshot gives the opportunity to point out again that the figures displayed on the Swell / Swell2 / Wind diagram are those shown in the Meteogram BUT one time step before. At 5h instead of 8h in this example.
A known bug.

The data that you show is not reported data but a forecast by a wave model.
In Windy, Waves is the total sea i.e. the mix of swells and wind waves.
So it is possible to get a forecast giving a 3.1m total sea with a 3m main swell and a 11kt cross wind.
It would have been interesting to show the Wind waves layer at same time. If I am not wrong at same time and same location the Wind waves were 0.3m. This is consistent.