This just mean that the yarn was pre-dyed, that is, coloured before being woven or knitted into fabric as opposed to piece dyed, when the whole work is coloured after it has been woven.
All mixed and complex weaves requiring more than one colour are woven with pre-dyed yarns, including tweeds, plaids, brocades, checks, stripes and knitting wools.
Ikat fabrics are one of the most interesting examples of yarn dyed textiles.