It means that someone is already using the flaw, not that it could be. Evidence comes from vendor and researcher reports, honeypots, incident response cases and government lists such as the KEV catalog.
It changes the priority completely. A flaw with a public exploit and a few attackers behind it is a different thing from a flaw that is merely severe on paper. When active exploitation is confirmed, the time to fix is measured in hours and days, and defenders also need to check whether they were already hit before they patched.
MOVEit Transfer in 2023 is an example: the flaw was being used in real data-theft attacks before most customers knew it existed.
Keep a faster path for flaws that are being exploited, patch or mitigate first, and look in your logs for signs of earlier compromise, because a patch does not remove what an attacker has already done.