Plain English Meaning
Controller is telling you to switch your transponder to the standard VFR code, which is 1200. After this, you'll show up on radar as a normal VFR aircraft rather than under a specific ATC-assigned code.
Full Definition
An ATC instruction directing the pilot to set the aircraft transponder to code 1200, the standard code used by aircraft operating under visual flight rules within the United States.
Context Anchor
You will hear or read this phrase in transponder and ATC communication procedures, especially when ATC is ending radar service or no longer needs you on an assigned code.