Normal healthy body fat for a female (I'll asume your 18-30 )is around 22-27%. So you are a healthy body fat. You could lower that to the lower end of the scale, but that would again take both exercise and diet. Athletes can get down to 18-10% body fat, that is probably where you would see some ab definition. Lower then that is usually the extream athletes or eating disorders and can cause health concerns.

The reason to move on to stage 2 is also so you can learn healthy eating habits to help you maintain your weight once you lose it. Can you really eat only induction allowed foods for the rest of your life without being tempted to cheat or bored? By trying new foods and upping your carbs you get a much wider variety of foods to choose from. Also by learning your carb tolerence level you can find out how much you could occasionaly splurge. Someone with a CCL of 150 could handle a small piece of b-day cake much easier then someone with a CCL of 20