It means that the devs/ROM developers can take the source and improve on and fix old stuff and/or use this as a base to create new stuff (apps and ROMs).
There's a lot that wouldn't be published (i.e., Sense, bootloaders, recovery, etc.), but the base operating system should be there. I think that the hardware manufacturers are probably required to release the source code like this at some point as part of the open source agreements with Google.
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