What does "when iMessage is unavailable" mean?
It means either 


when the device is unable to determine if a message has been delivered over the iMessage transport successfully. When a successful delivery occurs you see a little 'Delivered' notification below the message in the history, and after a period you should have the option to resend as an SMS
or the recipient has no registration with the iMessage server to indicate that it could use the iMessage transport and will use SMS instead.