What does pre-approved finance mean?

So you have your home for sale and an agent brings you an offer on your property, subject to finance, however they say to you that the buyer has pre-approval, what that means is the buyer has had some form of communication with the bank and based on that communication the bank has given them a pre-approval to offer up to a certain amount of money, by no means does this mean they are guaranteed the money. The buyer must still go through a formal application process to get their finance approved, so they can purchase their new home.