What does the phrase postal code mean?

It's the British (and Commonwealth) system in place of Zip Codes.
Post (or Postal) Codes are an older system and based on "Post Towns" where the post would be sorted.
For Example EH10 4QL is a post code for:
Town (EH)- Edinburgh
Area (10)- starting with the area round the main post office as 1 and working out. Edinburgh has around 50 areas including big chunks of countryside and smaller towns around the city.
Local post office (4) - now really just a local neighbourhood since many offices have closed.
Postman's walk (QL) so in theory all the letters follow on.
A post man from post office 4 might have QK,QL,QH to do on his round... this breaks down a bit in the modern period since a lot of post offices have moved or been closed over the years and they tend not to recode areas.
>>Postal code is simply the generic name for a code used for postal delivery services. Many countries give their own names to their postal code systems (ZIP Codes, PIN Codes, Postcodes etc.) - postal code is simply the generic term, and is not unique to Britain and the Commonwealth.