I've interpreted it as the doctor becoming part of the timeline again, which means everything that ever happened, except his adventures with Amy, really happened (which is why Rory forgot about him but remembered when Amy brought him back).

What I didn't get is the bit about the doctor not being born at all and the Earth is still fine. They should all be Daleks by that point, if there was no doctor. The world would have been fucked, kind of like what happened when Donna turned right.