“Material Condition” is a Navy-wide ship readiness code, similar to the national DEFCON code. It incorporates a number, and may include one or more letters. It indicates battle readiness, much like the conditions used on surface ships (X-RAY, YOKE and ZEBRA, which indicate which water-tight doors are closed), but also includes crew readiness for battle. Condition 4 is least ready, Condition 1 is most ready.

Condition 4. In-port, with the in-port duty section.  

Condition 3. At sea, peacetime conditions. The only threats are fire and collision.  

Condition 2. Wartime steaming. Battle could happen at any time. This is the Material Condition of every SSBN while on patrol. The reason, is that if an adversary intends to conduct a nuclear First Strike, its first action, before launch, would be to sink every enemy SSBN it could, to limit a retaliatory Second Strike.  

Condition 1. Battlestations.

The letters that follow are specific to the type of ship and specific mission. For example, on a Knox-class frigate at Battlestations against a submarine (ASW — Anti-Submarine Warfare mission) we set Condition 1AS. On a Skate-class SSN, we set Condition 1S. On both George Washington and Ohio-class SSBNs, when we stationed Battlestations, Missile, we set Material Condition 1SQ.

When we went to Battlestations, Missile, the command on the 1MC (ship-wide PA system) was either “Man Battlestations Missile, for WSRT” (Weapon System Readiness Test) or “Man Battlestations Missile, for Strategic Launch”

Source: https://www.quora.com/What-does-set-for-condition-1SQ-from-the-movie-Crimson-Tide-mean