Sometimes the Hydrometer is hard to read. I bet that you have 1.06. And as stated the Lees is the sediment at the botom. As you have a lot at the bottom that is a good indication that the primary fermentation is done. What the lees is the dead yeast clumping together and sinking to the bottom. I would definitely rack it and let it be.
Racking is the process of transfering the mead from one container to another leaving the lees behind. Ususally this is done via a syphon method. Don't worry if you don't have another container, I rack to my cleaned out brew pot and then clean out the original container and then put the mead back into the same container all the time. Usually a first racking, called racking off the primary fermentation or racking to the secondary, is done when the lees reaches a 1/4 to 1/2 inch in thickness, or therabouts. Racking also helps the mead clear. If you are doing a fruit mead then you usually rack onto the fruit and put the fruit into the secondary. This way you don't loose the flavor of the fruit as much.
Sorry for stating things in a simpler manor, by your response I gathered your new to mead. You will find these terms in the forums. Mead is actually very simple. Many times the primary fermentation only lasts a week, other times I have had it take a month to slow down. You will notice when it slows down and after you rack to the secondary some fermentation still happens but the majority of the work is done and no you still haven't goten rid of all the yeast a trace amount will still linger even after racking. That is why it is called a secondary fermentation.
Hope that this helps.