That means that it has questions that relate understanding, and not simple regurgitation of the material. For example,it may not ask a question like this
Which of the following hormones is produced in the pituitary gland?
Instead, it would ask a question more like:
A thirsty man in a desert would have high levels of which hormone in his body? (like ADH)
You see, it is an application and an understanding of the concept that would only allow you to get the answer.
And especially for the Chem section, there has traditionally not been a lot of calculations. There has been a lot of understanding, like how to draw molecules, lewis dot structures, enzymes, etc...
Hope this helps