The 'envelope' is the change in volume of the selected region over time. This can be used to make fine adjustments to the volume over time or even more crude changes like fade in or fade out.

Select the region you want to change the volume over and use the Levels tab -> Envelope or Menu -> Effects -> Envelope. Click and drag on any point to adjust its volume (right click removes the point). Click the Set Flat button to reset the volume and remove extra volume points.