In practice it means that you have a very good relationship with someone considering the circumstances. If you say this about your boss, you are probably not friends with your boss, but you are friendly with him, and he sees you as a valuable, respected employee. Normally it is used when you are speaking to a third person about the other person (in this case your boss) and the other person (your boss) is not quite a friend or there is some reason why you can't or shouldn't be friends (he is your boss). This could be someone you know only through business dealings, or someone you don't see often, or something like that.