What is meant by "cook until the oil separates" in Indian curry recipes?
Oil is separated in curries normally after you have cooked spices or sauces for ~10-15 mins. You can tell by seeing "bubbles" appearing and the oil by making a thin layer on top of your sauces/curry.
It varies, but normally after 10-15 mins the oil separates from your curry.
Normally after cooking for 10-15 mins most of the water dries up which causes the curry (mostly made of thick sauces) to separate from the oil.
It's always good to let the oil separate from your curry because of two things:


Extra water dries up
All spices and curry get cooked properly



The food tastes much better if spices and the curries are properly cooked.