Sag refers to the amount that the shock is compressed due to the rider simply sitting on the bike. Generally, you should try to set up your forks so that sag accounts for 20-30% of the overall travel. However, some forks are meant to be used with no sag, so you should check with the manufacturers recommendations for your particular fork and also take into consideration your own preferences. Notice how the head angle increases as the fork is compressed. It is important to account for sag in the fork when you layout the frame geometry. If you neglect sag, the head angle when a rider is on the bike will be steeper than you planned.
FsCAD also employs the term sag to describe the rear suspension. In this case we've taken liberties with the definition to mean that sag is the amount of vertical travel consumed by the rider simply sitting on the bike. fsCAD doesn't do any calculations to determine what the sag will truly be given a certain rider's weight. Instead, fsCAD tells you that in order to achieve the geometry that you've defined, you are going to have to set the bike up with the amount of sag that has been calculated.
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