What does the power at different rpm mean? Does it mean Car 1 has
better power than Car 2 because it is at lower rpm?
Or does the rpm not affect the power comparison?
tl;dr: The rpm of the power peak affects the engine's usability for different applications.
The "peak power" number is just one point on the power band of the engine. Ideally, you'd like to know the entire curve (and how its affected by ambient air temperature, altitude, humidity, phases of the moon, etc):
In this figure, we see the horsepower and torque curves for two engines (where torque is solid and horsepower is dotted). Remember, torque is the engine working on the axles and, thereby, the wheels and tires. This is what accelerates the car forward.
If you know the torque of the engine at a particular rpm, you can calculate the horsepower at that rpm:
horsepower = (torque * rpm) / 5252
Admittedly, the above equation is specific to crazy old-time Imperial units. Insert appropriate conversion factors if you'd like to get metric units out instead.
Very casually, you can imagine horsepower (or "power" if you're being unit agnostic) as being "that which maintains speed in spite of drag." We generally expect a high horsepower vehicle to have a higher top speed (provided that it has the gearing to reach that speed).
Looking at the above equation, you can also see that, in these units, the horsepower and torque curves always cross at 5252 rpms (i.e., the scalar values are equal even though they're totally different units).
All of the above helps you understand what the manufacturer is telling you a bit better. What's missing is "what do you want from a car?"
Going back to the chart, you can see that the blue line has a torque peak at about 2500 rpm and that it doesn't drop off until about 4000 rpm. This means that, from a stop, the car will feel like it pulls away strongly, right away. However, as the rpms get much higher, the engine will seem to run out of breath, accelerating much slower at 6000 rpm than it was at 1000 rpm. Qualitatively, this is what we would expect from a large-ish displacement normally aspirated engine.
The red line has a torque peak at about 5500. It will feel sluggish from a stop and seem to wake up as the rpms increased. From 5500 to 7500, the red engine will out-accelerate the solid engine by a significant margin. This is roughly what we would expect from a smaller engine (and forced injection would only increase this late-rpm peak).
The question for the customer is: which do you like better?
The early torque peak of the solid line is fun from a standing start but you will need to shift early (trading mechanical advantage to get back to the torque peak). Hopefully, you have enough gears to get you to top speed. This profile is often preferred in a street car.
The later peaks of the dotted line is sluggish from a standing start but becomes progressively more exciting as revs increase. You won't need to shift as early to stay at peak power, keeping the mechanical advantage for more revs. This profile is often preferred in a race car.
Full disclosure: I've owned low-end, high-end and (high-end + turbo) vehicles and I prefer the last combination. I haven't been interested in standing starts from a red light for many years.