They mean that they have the best possible hand so far.
The important part, is "so far", eg you have Ks Qs, flop is 9c 10c Jd, you have flopped the "nuts", the best possible hand with the cards currently available, anyone with 2 clubs can beat you if another club hits the turn or river, pkt 9's 10's or J's beats you if the board pairs or doubles. Depending on the game you are playing (freeroll sng or mtt and the intelligence of your opposition) an all in should indicate at least the nuts or a nut draw, ie, they have 2 clubs and 1 is the A. In a situation like this, apply pressure and don't bet too low or check trying to trap. Force them to put their "life" on a draw.