It means that there's no "R" class inventory available.

NW is able to look in your reservation and the EUA system (automated upgrade system) will note in your PNR every time it tries to upgrade you. If the upgrade isn't available it will put a note in your record stating that your flight was not upgraded and that you were put on the standby list.

You are still eligible for an upgrade by the EUA system should an "R" class seat open up when the EUA system runs and you're next on the list. Otherwise, you will have to try and snag one at check-in or hope for one at the airport.

Just because there are FC seats available does not mean upgrade seats are also available.

-RM