It's commonly seen on food packaging. The label will often say something like, "This product is sold by weight and not by volume. Goods may settle in transit." This means that the box of cereal contains the 32 ounces of cereal that are labeled, even if the box looks to be only half full. The box may have been completely full at the cereal factory, and that is why the box is the size that it is, but by the time it gets to the store and sits on the shelf, the cereal has settled in and the box looks less full.

Pour some dry breakfast cereal into a measuring cup. See how high it is the cup. Now, gently shake the cup. The flakes will start to fit themselves into the spaces between other flakes. They will pack in more densely. They will take up less space. They will not fill the cup as high as before. This is "settling." They are telling you not to complain if the box doesn't look full. They are saying it contains as much as it's supposed to, but it might not fill the box because it has settled, due to normal shaking in transit.

A great explanation given by Jason. I just had this same conversation with one of my sons last week, my audience required different wording but the same meaning. I told him that this was generally used with dry ingredients or items - that within the packaging there were natural pockets of air around and between the individual flakes of cereal, loose Lego or building blocks or even tiny grains of laundry soap. During transit by plane, train, boat or auto, the box or container would experience a good amount of shaking, movement up and down, even air pressure differences if by plane, all of which would cause movement of the individual pieces and allowing these cushioning pockets of air to escape and rise to the top of the container, allowing gravity to pull these items to the bottom of their container, packing, settling or concentrating them more at the bottom of the container. All of this was the reason that he was still getting the same amount of potato chips in his bag even though this particular bag appeared to be less than half full.

Normally it's seen on cereal boxes.