I hope this example will help everyone to understand how awk internal variables like NR, FNR etc change when awk is processing two files.
awk '{print "NR:",NR,"FNR:",FNR,"fname:",FILENAME,"Field1:",$1}' file1 file2
NR: 1 FNR: 1 fname: file1 Field1: f1d1
NR:...