Inactive
No user interaction happened for the period of time specified.
A user interaction is a mouse movement, a button click, or a keyboard key pressed/released.
The settings allows for multiple levels of inactivity. First the screen saver is shown, a little later you can suspend/hibernate or minimize electricity use (i.e. make a PCI board go to a sleep mode like because it is not used for long periods of time.)
On a server, this can be a problem. Some servers allow for a Wake On LAN (WOL) setting in their BIOS / OS, but that takes a little while and many times the client will not wait long enough for the server to wake up.
Also, certain things such as network traffic can be considered to be a user activity. But I do not think that X11 offers that option. My server such goes to its screen saver even if the network runs full time all day.