There are two different types of unlocking for iphone that iphone users needs to know, one being getting access to the device to install third party software and only third party applications accessed over Wi-Fi can are supported, ifuntastic is a solution that makes this process automated. The other kind of unlocking is modifying the firmware to ensure it accepts other networks called iphone SIM free.
Jail breaking, unshackling are other terms used to define unlocking iphones, jail breaking allows one to create their own ringtones instead of using the iTunes ringtone maker that costs one money and networks unlocking methods require that the iphone has already been jailbroken to give easy access to different features that the unlocked iphone may not have. Once an iphone has been unlocked or jail broken it voids terms and condition of a given warranty and the user does not enjoy the rights of a warranty because they are modifying the iphones system the other unlocking modifies the radios firmware which is riskier and most iphone companies are clear and do not repair an unlocked iphone since they get a percentage on the service provider on the phone during sale and unlocking it means they loose on that.
Some of the networks on the purchased iphone do not support some applications and thus force users to unlock their iphones to get wide variety of services on their devices, unlocking simply mean to open up the devices software so as to get a wide variety of applications, it is not illegal and one can unlock their iphones however considering the disadvantages of doing so in order to be able to get a variety of applications and services. To answer the question what does unlocked iphone mean the above information may be of help and this apply to all brands of iphones for one to enjoy personalized features and a wide variety of service.