It's a nice honor for people. At the least, it means you're a very talented player, who has a good reputation. You had to get that reputation from somewhere, so generally you're one of the best players at your position, or were at one time and are living off your reputation.
I've heard several interviews with players who acknowledge that they just kind of go by ESPN highlights when voting. Coaches are probably similar. These guys are a little busy on sundays during the football season - unless they're voting on a player they played against, they likely don't know much more about the players' performance than your average casual fan. Case in point - Gurode was likely not a pro-bowl caliber center last year. But for a few weeks, he was the talk of the town at a position that doesn't get much attention - he kicked Haynesworth around, and then got real famous because Haynesworth kicked him (literally). So he got himself noticed. Does that mean he's a great ("pro-bowl") quality center? Likely not. But I couldn't begin to tell you who I'd have replaced him with.
Other positions where you can be dominant while not compiling stats have similar problems in the casual evaluations made by fans, players and coaches. DBs are judged on INT and PDs....because what else can you grab onto when taking 15 minutes to evaluate an entire conference? OL are picked by how well you know their name.
It means alot for certain positions. At spots like RB and QB, you can readily tell who the best in the league are. It matters less for others.