The sensor has a LEGO cross axle receptacle and the value represents the force that is applied to an axle going into the sensor. Note that the force measured is the linear force going into the sensor.
This sensor can be thought of as an analog touch sensor. Unlike a touch sensor, which gives just a binary value indicating pressed or not-pressed, this sensor gives you a numeric value based on how hard the axle receptacle is pressed.
The HiTechnic Force Sensor measures the force applied to the cross axle receptacle and converts it into a signal that can be used by the LEGO Mindstorms NXT. The force can be read using LEGO Mindstorms NXT Software Force Sensor Block.
The sensor measures the force applied by a LEGO axle being pressed into the sensor as shown by the arrow below.