It means there is nothing legally binding the phone’s use to a particular carrier. Meaning if you buy an unlocked phone from your carrier, then try a different carrier, the new carrier won’t recognize the SIM card in your device and you’ll only get voice service as a result.
An unlocked phone typically means that it will be better for international travel purposes because it will accept any kind of SIM cards from other countries when you make calls or access internet services. Unlocked phones are also sometimes cheaper because they’re not controlled by carriers since their use is not restricted to one specific carrier so these phones can be more competitively priced than their locked counterparts.