It means that you haven’t charged your iPhone battery recently enough and the phone’s almost out of juice. As the icon underneath the battery shows, you need to plug your iPhone into a computer or wall charger and get some energy into it pronto.
The phone can still run a while in this state, but obviously it isn’t usable. This is done to conserve power and keep the data on the phone secure.
But, just because it can wait like this a while doesn’t mean you should take chances. If you see the flashing red iPhone battery icon, charge the phone as quickly as possible. If you can’t, turn the phone off to save more power and plug it in when you can.