What does an input string of epsilon mean?
In the context of NFAs, $\epsilon$ marks state transitions that do not consume input. These transitions thus express the non-determinism of the automaton.

When discussing the acceptance of $\epsilon$, the symbol marks the empty string (this is equivalent to the condition that an accepting state is reachable by a sequence of $\epsilon$-transitions from the start state). to avoid confusion, some authors use a different symbol for the empty string (often $\lambda$).