It would seem to mean that somebody removed it from the list of devices associated with your Apple ID. That will let the thieves or their customers reset your phone and set it up as their own.
To remove it from that list, they would have needed to know your Apple ID and Apple ID password … or one of the local passcodes / passwords for an Apple device of yours in their possession.
I suspect that you may have been a victim of a common "phishing" scam, where the thieves message you, claiming to be from Apple or to be the Police, and saying that they want to help you get your phone back. You interact with the message and give them your credentials, or remove your phone from the list of your devices, and the criminals are now home free. There are special circumstances under which the phone will Activation Lock itself again, but it is exceedingly unlikely that is going to happen.
You can still contact your carrier and ask them to blacklist the phone, so that no carrier who honors the blacklist will ever provide cellular service to the phone again. That will at least partially "brick" the phone. But it sounds like the thieves now have a "free" iPod touch to browse the Web (over Wi-Fi), and run apps, if they like.