Matt: An equilibrium phase (or equilibrium state) is one in which all transformation has taken place, and no matter how long you wait it's structure will never change, it is at equilibrium. A metastable phase (or state) is one in which the structure will change if you wait, eventually reaching the equilibrium state if you wait long enough.
In the iron-carbon system, graphite is the equilibrium phase of carbon below A1. However, the speed at which the carbon can diffuse and form graphite is very limited, especially at low temperatures, so unless you hold the sample at a high temperature (but below A1) for a long time you won't see graphite...at least not in most steel structures. But that carbon has to go somewhere, so you see cementite formation because it takes less time to form than graphite. In the case of cementite, it is essentially stable at room temperature. What that all means is that while you are heating and cooling steel, unless you go slow enough for the carbon atoms to have plenty of time to move around, you are more likely following the iron-iron carbide phase diagram.
The extension of this is what happens when we harden steels. If you cool the steel fast enough, the carbon doesn't have enough time to even form cementite, and it is trapped within the lattice of the iron atoms and forms martensite. All we are doing when we temper steel is giving the carbon atoms enough energy to shuffle around a bit and form more stable (and softer) carbon phases, such as cementite.