This just popped up for me, in the case where I booked an M fare which was eligible for a 1K Instant Upgrade but the upgrade was not applied. (This is a trip with an international segment connecting to a domestic segment.) The international segment is also annotated "Not eligible for upgrade" which is incorrect; I've applied for a PlusPoints upgrade for that segment.

So, seems like a glitch. I would guess it indicates that the M fare booked "prefers" J cabin, but J is not currently assigned.

This only has appeared on the purchase confirmation receipt -- I can't find it anywhere else in the system.