I'm interpreting it as your game is currently not under any sort of publishing agreement to the point where it's out and being sold, or is about to be released and sold. They have a more detailed rules section but I'm not sure if it talks about the specifics of the publisher rule any further.
These are last year winners:
* The Amazing Brain Train by Grubby Games (puzzle/strategy)
* Audio Surf by Dylan Fitterer (rhythm/action)
* Chronotron by Scarybug Games (puzzle/platformer)
* Impulse by a team of Rochester Institute of Technology students (puzzle)
* The Maw by Twisted Pixel Games (action/adventure)
* Polarity by a team of Carnegie Mellon University students (platformer/puzzle)
* Project Aftermath by Games Faction (tactical/action)
* Schizoid by Torpex Games (action/strategy)
* Strange Attractors 2 by Ominous Development (puzzle/strategy)
* Sushi Bar Samurai by Molly Rocket (exploratory puzzle)
I'm pretty sure Audio Surf, The Maw and Project Aftermath had a distribution deal by the time they were there, Audio Surf was even released on February 15, 2008, so I'm thinking of sending our game (last year wasn't ready enough to be showcased), maybe this publishing deal thing means being financed by a publisher (not very indie), instead of being distributed by one...
Anyway, I'll be sending an email to them just to be sure...