So, as I understand it, a boat (ship) operating in displacement mode is going to be the most efficient, up until that speed. Past that most of the additional power you put in is going into just shoving water out of the way that really doesn't want to, rather than fighting friction. Also it's where the entirety of your ship is trying to climb its own bow wave, so you're trying to push the whole boat up hill.

If you want to go faster than hull speed you need to have a different hull design like a semi-displacement or planing hull. These are a lot less fuel efficient than displacement hulls as well as some other dosadvantages with weight and bad weather, but if you want to go fast they are your only option.

TL;DR: it's sort-of a max speed. It's probably better to describe it as, the speed at which you need to go back to the drawing board for that vehicle.