You can perform a task very well, but if you can't explain to someone else how to do it, then you're a poor candidate to be a teacher.
You can be an expert performer, but if you have poor observation skills and can't spot what a student is doing wrong and then coach them properly, then you're a poor candidate to be a teacher.
It is entirely possible to be skilled in the area of performance, but unskilled in the area of rapport, encouragement, patience and all the other qualities that make a good instructor. Typically, this comes through as, "Look, I can do it. It's *SO* easy. Why the hell can't *YOU* do it?!?"
I've found some of the best teachers are the ones who have struggled through the learning process themselves. They understand where all the pitfalls to advancement are at every stage, so they can anticipate, explain and coach around these stumbling blocks. If someone picks up a skill quickly due to natural ability, they never experience these roadblocks themselves and are less capable at identifying them, and coaching around them.
Teaching and performing are two very different skills. Not mutually exclusive. But different.
To add onto this, you need to be able to ride at slow speed in a slightly exaggerated manner, doing things methodically, while keeping key points in mind.
Head turns are exaggerated, eyes are always up, looking where you want to go, knees into the tank, arms relaxed, hands & feet off of controls when not in use, using all fingers on the levers, etc. etc.
You don't have to be perfect, but you need to be willing & able to learn. If you do something wrong, it can be a teaching moment for the class. I can talk them through it. Even with the crash that Evoex witnessed. "Did you see what he did wrong there? Don't grab the front brake while you're turning a sharp corner. Keep your right hand on the bar, and control your throttle." But if you have trouble with several things at the same time, over and over again, it becomes tedious. Some of the students need to see what you're doing for it to click in their minds.
As far as coaching. A lot of that comes with experience. Where we are, we teach in tandem, one demos, one teaches, then they'll switch. They group the newer instructors with the older ones. You can learn a lot just by listening to how others coach, and if you have a problem figuring out what a student is doing wrong, you can always ask.
Our place recruits every two years, and I think the average instructor lasts something like four or five before life gets too involved to keep it up.
Edit: Think about it this way. What's the sequence for shifting from first to second? What does one need to keep in mind while doing so? Why do you need to do it? What's different when shifting from second to first?