It means the same thing basically as it does in 3d space. If you place movieclip on the stage and set its x and y each to 50 and trace its coordinates:

trace(myParentMC.x, myParentMC.y); // you'll get 50, 50 in the output

If you then add a clip insie of myParentMC and set its x and y to 25 you'll get either 25, 25 or 75, 75 depending on what you care about.

The reason is, relative to its parent, myChildMC is only 25 pixels away from its origin, but in terms of the overall stages upper left corner, its 75 pixels away.

So if you wanted to get the coordinates of an object in relation to the stage, you first have to create a point object with its coordinates:
var myLocalPoint = new Point(myChildMC.x, myChildMC.y);

Then you pass this point to the localToGlobal method
trace(myLocalPoint); // 25, 25
trace(myChildMC.localToGlobal(myLocalPoint); // 75, 75