What does lowering the action mean?

Yep. More often than not you can achive the same results by adjusting the rod and getting the bow out of the neck.
 
Lowering the action does mean getting the strings closer to the frets.
There are different ways to accomplish this.

First off, many people think that a guitar neck should be straight, which is not the case. It should have a slight bow in it.

As tube rightly says, you can adjust the amount of bow by adjusting the truss rod.

What is the real question here?

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Right.

You can also lower the action by adjusting the bridge height and the saddle height, by filing down the nut, and by placing a shim in the neck joint. Depending on your level of expertise, you may want to have some of these techniques performed by a tech.
 
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