It's kind of complicated. What they did was separate all the Star Wars EU material into the categories "Canon" and "Legends." Canon is what has basically been stamped and approved by Lucas, and everything else in the Legends category is up in the air. They're sort of saying that they won't erase it from Star Wars history... but it may not have actually happened and is therefore more of a... well, legend.
Frankly, I'm not against them cleaning up the EU. We tend to forget that for every good novel or comic there has been a lot of sub-par, questionable, and occasionally flat out bad stuff put out there. Not gonna name names but FORCE UNLEASHED II... and I'm not so keen on the first one either. As long as the Rogue Squadron, Thrawn Trilogy, basically everything big up to the Yuuzhan Vong invasion I'm in favor of keeping... I have to say after the whole Vong thing started and they started killing off characters just for attention (Chewie, Anakin, Ackbar, Mara, Jacen, etc...) well I say I'm fine with all that being cut out.
We live in an Expanded Universe where Mara Jade dies, but Admiral Daala is still alive... not okay with me.