Let's be clear on these:

vapor docs, it says here that by default it has 1000 concurrency.

Technically it is the default maximum, so its a bit different than default because this is the maximum for your acount on ALL of lambda functions you have. But if you need more you can contact to AWS support.

So in my example above does this mean queue1-production and queue2-production has 1000 concurrency while queue2-production has 10 concurrency?

This one is depends, if you just did this configuration and did nothing on AWS Lambda configuration, then yes you are correct.

However i need to mention that you can also set reserved concurrency for you lambda functions, for example on your queue1-production (as a lambda function) you can set 10 reserved concurrency, and then other lambda function have only 990 concurrency(not 1000).

Please read: https://blog.laravel.com/vapor-individual-queue-concurrency There are a few good links in there as well.