Cure #1 is nitrite which is used for short term curing. It protects the sausage from letting botulism start because of the time the ground meat is the temperature danger zone. It also adds flavor. You need to follow the directions on the cure #1 container. Too little or too much can be dangerous. Used in sausage like summer sausage, kielbasa, snack sticks etc.
Cure #2 is nitrate and used for long term curing of ground meat. It starts out as nitrate and slowly breaks down into nitrite. It is used when you want to dry sausage long term so the moisture leaves and you are left with a dry hard sausage like some pepperoni, chorizzo. salumi etc. These type of sausages require fermentation. A starter culture is used to lower the acidity and let the meat ferment. Mold grows on the outside which helps pull moisture. Over time when the nitrate breaks down into nitrite, the nitrite starts to kill the culture.