That means you can’t host your own dns or have some other commercial provider do dns resolution for you. Typically the registration and dns service are two distinct things.
Cloudflare will control and see your DNS traffic unless you switch the registration to a new company. Right now you would pay $11/yr for registration and $0/yr for DNS service. They could change that $0/yr to something else.
It’s only noteworthy because it deviates from the norm. For some reason they really want to handle your traffic.
If you are planning on using Cloudflare for any other aspect, I wouldn’t hesitate to use them for DNS. They are a good option and among the most affordable.