It is essentially saying that as you lose fat, the cells retain water while it deals with the changes. After awhile, your cells are ready to release the excess water, and you suddenly drop several pounds.
I have noticed during my weight loss that my flabby arms that I have hated are looking slimmer, but instead of feeling firm underneath, they feel squishier. After reading this article, it makes sense!
Check it out! http://100down.org/the-whoosh-effect/