What does "good standing" mean?

A calculated flag on every membership — current status, no suspension and no overdue dues — that member pricing, members-only events and membership cards read.

Good standing is calculated, not typed. Every member record and the member list show In good standing or Not in good standing next to the status.

A membership is in good standing when all of these are true:

Its status is Active or Renewal due. Grace also counts if A member in grace is still in good standing is turned on in Organization Settings → Terms & renewal rules.
It is not Suspended.
No dues invoice on it is unpaid more than the number of days set in Days an invoice may be overdue. With 0, an invoice one day past due costs good standing.

Pending, Lapsed, Resigned and Closed memberships are not in good standing.

Members uses good standing for member pricing at events, for members-only events, and for what a membership card shows.

You can filter the member list with In good standing or Not in good standing.

To set it by hand, open the record and click More, then Override status or standing. An override needs a reason, is marked on the record with a pencil icon, stays until someone clears it, and is written to the audit log. If standing looks wrong without an override, see A member's status is wrong.