That is the temperature range at which it is safe to store the iphone when you are not using it. Temperatures above or below the extremes listed (especially for extended periods) may damage parts and render the thing inoperable. Basically, try not to freeze or boil the thing...
The temperature tolerances are much greater when the thing isnt being used, but if you're operating the device, the functioning electronics are a lot more susceptible to temperature and the device may not operate properly in the same extreme temperatures that is safe to store the device. As such, there will probably be a narrower temperature range for the "operating temperature".
Message was edited by: Topher Kessler