an elevated level of ketone in the blood. Ketone is formed by ketogenesis when the liver glycogen stores are depleted and a process called lipolysis starts.
Non medical terms = your body begins to use fat for energy and ketones are formed. Look up ketosis in google for some great in depth article. One way your body gets rid of ketones is through your lungs. It's like the alcohol smell, you can't get rid of it you just have to cover it up. Anyone who is loosing wt is making some and one way to test for them is the urin strips discussed above.
Don't be worried its a good sign. It will go away when your wt stabilizes. My wife does not like the smell so I end up chewing a lot of gum.