That terminology was used in PPP3 lectures, but what does it mean?
The spending transaction should follow rules of the smart contract as was answered here Can blockchain viewers read the source code of a smart contract if they know its address?
The spender by default doesn't know the rules to form the spending transaction. Or his wallet can read the off-chain code of our smart contract somehow? The wallet actually has the whole copy of the blockchain and our smart contract inside also.
Because only the verification script (on-chain code) is hashed to provide the address (but probably we submit to the blockchain only on-chain code, I am not sure...)