What does an editorial decision of ‘major revisions’ actually mean?

Research authors are often very confused about the messages they receive back from journals AFTER first peer review.

One of our papers came back from review the other day with a decision of ‘major revisions required’. I got really confused.

‘Dear Dr.,

I have now received referee reports for your paper entitled "xxxx”, which are detailed below. As you can see, the reviews suggest that MAJOR REVISION of your paper is required.’

Is this good news? What does this really mean…