He means that the widescreen image is set within a 4:3 image, instead of the image being squeezed horizontally so as to minimise the size of the letterboxing bars. Anamorphic encoding means more resolution of the DVD format is used to reproduce the widescreen image, rather than wasting it reproducing 'black bars'.
If the image is not anamorphically encoded, it means people with widescreen displays must zoom the image which further degrades quality. The distributor simply isn't using the DVD format to its full potential.
Here is a better explanation with some images:
It looks like this film, along with Ferry To Hong Kong (1958), and King Solomon's Mines (1937) are being released in a 3 DVD box in Australia on the 3rd of August. The price is good, only AUD$30 for the three films.
I have contacted the distributor and they said the two CinemaScope films North West Frontier, and Ferry To Hong Kong are both being released letterboxed widescreen, rather than anamorphic widescreen. So it seems they are using the same Rank transfer of North West Frontier as presented on the non-anamorphic Region 2 DVD.
North West Frontier is now available on a region 2 DVD in France in anamorphic widescreen 2.35:1 and English language issued on the PVB Editions label, with original artwork on the box, under the title Aux Frontieres Des Indes. The only drawback is having to put up with French language subtitles which cannot be removed.
Released in 2012 on a Region 1 DVD by VCI in the USA and an excellent transfer. Three anomalies: The DVD box says it is region free, but it is actually Region 1; the DVD case also says it is 4 x 3 letterbox, but is actually 2.35:1 anamorphic widescreen which is 16 x 9 enhanced. Also, despite the American title "Flame Over India" on the DVD case, the transfer on the disc is of the original British version "North West Frontier".