It could mean many things but usually the first major rewrite comes after a developmental edit. A developmental edit will point out all the BIG things that are wrong - plot points, characters, tropes, problematic elements in the worldbuilding etc. They usually require authors to go through and rewrite huge portions of the story in order to get it to work again once a major part has been changed. For example, a developmental edit might excise an entire side character from the narrative, who has been present from chatper 1, and incorporate their personality and dialogue etc. into another character or two. Thus, it would be a major re-write.
Only once the developmental edit is completed should you be looking at line edits in my opinion. No point polishing something until someone has gone through your book and pointed out all your inconsistencies and things that need tightening up on construction.