What does it mean on NAU's page where it says "interview preference given to Arizona residents"?

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It means that out of state applicants need better stats than in state applicants in order to be considered for an interview (it's essentially like the in-staters are being graded on a curve).

Going through the posts from last years NAU cycle, the stats for those invited to an interview were:

Out of state - cGPA: 3.75, GRE: 157V, 156Q, 4.5AW

In the state - cGPA: 3.59, GRE:155V, 153Q, 4.1AW

As you can see, there's a lower average for the in-state interviewees, particularly in overall GPA
 
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