What does no contract mean on iPhone?

Ok so in September the iPhone 5S is suppose to be announced and i want to get it as a new phone, I've been living off of a prepaid phone so far and that's basically having to buy minutes every once in a while but with the new iPhone 5S coming i want to take advantage of it and get it now, i know T-Mobile and Sprint are the only company's that offer unlimited Data (Cuz i use it allot) but T-Mobile says they have the No Contract iPhone, i know that means i have to pay full price for it but what else can i do with a No Contract iPhone?

No contract means you are not tied to that company. If you decide later that you want a different phone, you can just simply buy that different phone, versus with a contract you have to either wait for 2 years or wait for them to offer you to upgrade (which will lock you into 2 more years). You can at any time leave that company if you don't have a contract, like if you hear another company actually has a better deal. With a contract, you CAN leave, but you have to pay a steep payment to do so.