What it means is: You wrote a check to the State of Washington, and it did not bounce.
Almost anyone can fill out the paperwork and pay the $57.00 (plus/minus) license fee and get a General Contractors License in the State of Washington. It takes less than one week! It is a bit more complicated; you can buy a bond (about $250.00) or put $12,000 in the state escrow account and you have to purchase some minimum liability insurance, but THERE IS NO TEST, YOU DO NOT NEED TO KNOW ANYTHING ABOUT CONSTRUCTION, BUILDING, CODES, BOOKKEEPING, OR ANYTHING. NOTHING!
And you thought that hiring a Licensed Contractor meant that they knew something, that they were qualified. Nope! No skill, No knowledge, No ability needed nor required.
Remember, a salesman WILL sell ice to Eskimos. Remember the phrase, "She's a strong runner!"? Many Contractors are simply, salespeople. Salespeople sell what they sell, not necessarily what is best for a project or a customer. The Salesman's goal is to make themselves money.
By law, it is illegal for anyone to work on Real Property, your land, building, home, that is not a Licensed Contractor. That does not mean they have a business license for the City of Burien or have a business license with the State of WA. The Contractors License must be issued by the State of Washington, Department of Labor & Industries.
Just because a "Contractor" has a Contractors License with the State of Washington, does not mean that if they have employees, that they are covered by Industrial Insurance.
If you hire an unlicensed/uninsured "contractor" to work on your home, and someone gets hurt, the homeowner could be held liable for all medical and disability issues for the life of that or those people/person. If you hire a Licensed Contractor whose employees are not covered under L & I, the homeowner could be held liable for any and all medical and disability issues. You can also be held liable for all taxes, fees and penalties.
If you hire an unlicensed contractor and something happens to your house, a fire, for example, you have no recourse with that "contractor". If the "Contractor" is not licensed, he has no insurance and certainly no money, otherwise he would pay the $57.00 license fee.
Plumbers' and Electricians' licensing is different. They actually have to take tests and be qualified as well as insured.
When "Guy", or that General Contractor shows up and says, "We can do that." and that plumbing fitting blows off and floods your home, remember that a General Contractor is not necessarily licensed or insured to do plumbing. The cost of rebuilding your home after the flood could be coming out of your pocket. Without a doubt, "Guy", that non-licensed contractor, will be of no help! That licensed Contractor who is not a licensed plumber can't help either, he has no insurance for plumbing.
A Contractor, licensed in the State of Washington, will be insured and they will have a bond, but they may be no more knowledgeable about building than the business card they hand to you.
Construction is "brick and mortar", hands on, nuts and bolts. The fancy office, the nice truck nor the "smart phone" complete a construction project/home. It cannot be completed with a click of the mouse or fancy IT. It is all about the people as well as the skill and attitude of the people who do the work!