If you look for "volere dire" at De Mauro's dictionary, you will see that this is a common ("CO") verbal expression that can have the following meaning:
1 significare: cosa vuol dire questa parola?
That is, if you say, as in the above example,
cosa vuol(e) dire questa parola?
you are asking
cosa significa questa parola?
a question that could be translated to English as "what does this word mean?".
It's quite usual to say "vuol dire" instead of "vuole dire": this phenomenon is called apocope or troncamento (i.e., truncation) and has been treated in previous questions and answers: see, for instance, Why use the apocopic form “voler (vivere)”?. In fact, as you can read in the article "troncamento" of Treccani encyclopedia,
Il fenomeno è invece scarsamente diffuso nelle regioni centromeridionali, in cui compare comunemente solo in espressioni cristallizzate nell’uso, come vuol dire, si suol dire, ma è per il resto piuttosto raro e da molti percepito come caratteristica di un parlato ricercato
"vuol dire" is nowadays a crystallized expression, so it's even commonly used in the central-southern regions of Italy, where the "troncamento" phenomenon isn't widespread in usual registers.