It means that our church is governed or “overseen” by bishops. The word “episcopal” comes from the Greek word episcope, which means “oversight.” Each individual church (or “parish”) belongs to a larger governing area called a “diocese,” which is overseen by an elected bishop. All the dioceses together make up the church across the whole country (and a few missionary dioceses in other countries), and they are overseen by a specially elected bishop, called the Presiding Bishop. A bishop is one kind of ordained clergy person, along with priests and deacons.
However, all of the people of the church participate in the running of the business of the church family. The governing body of the church is General Convention which meets every three years, with Executive Council carrying on the business of the church in the intervening years. General Convention has two houses, the House of Bishops and the House of Deputies, made up of lay and clerical representatives chosen by their dioceses.