What you have there is an Add-A-Zone module. That is used when you don't have an extra wire to run to an added control valve or may have had a broken wire to an existing valve. The module allows for one good control wire to run two valves out in the field. There will be the module at the controller, like in the picture, and a bigger module in the valve box in the field which will connect to two valves.
Mark the yellow wires as they were in the terminal block, zone 3 and 12. Connect them back into terminal 3 and 12 respectively on the Rachio. Do not disconnect them from the red wire going to the field or neither valve will work.
The yellow wires marked 1 and 2 are only for indicators to match the wires out in the field marked 1 and 2 on the other module.
I hope that helps explain the situation.