It means that your iphone won't turn pages if you turn your mobile. So portrait stays portrait and landscape stays landscape. You can enter or exit this mode by tapping the home button twice, and scroll the icons to the left. The portrait orientation arrow icon will show/disappear in the menu bar. The iPad has a special button for this, but it is said that with the upcoming iOS 4.2 the button functions as a mute button. But I haven't updated yet.
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