What does 'Mean Diffusivity' tell me about the connectivity of cortical areas? I am reading an article about changes in thalamic volume and connections in relation to age and I understand that thalamic volume decreases with age. The authors find that mean diffusivity (MD) in thalamo-cortical projections increased with age. 

I'm not familiar at all with diffusion tensor imaging so I have trouble understanding what the ramifications are for the function/anatomy of the white matter tracts.
Short answer
The mean diffusivity (MD) in diffusion tensor imaging is a sensitive, yet a rather non-specific measure. Changes in MD tell you that water movement is altered, yet why and how will have to be answered through additional studies.  

Background
Diffusion MRI relies on the fact that water diffuses better parallel to axons than across them in the brain. Hence, in white matter that consists mainly of bundles of parallel oriented axons, water primarily moves in one direction, i.e., parallel to the fibers therein. In contrast, in the brain’s gray matter and the extracellular space, water moves freely in many directions. By taking advantage of the differences in diffusion rates, the white matter can be imaged in the brain. This technique is used diffusion tensor imaging, or DTI. DTI has been used to study disruptions in brain structure caused by trauma and white matter diseases, such as multiple sclerosis (Chi, 2014).

Now, there are several outcome measures in DTI and one of them is the mean diffusivity (MD). MD describes the magnitude of water diffusion within brain tissue and can be used to examine differences in brain structural integrity. Differences in MD may reflect variations within the intra- and extracellular space, a reduction in neuropil (basically, gray matter), and/or global increases in CSF (Clark et al., 2011). For example, increased tissue water in edema will increase the MD, whereas cell proliferation (tumor) may decrease the MD. In complex diseases like multiple sclerosis (MS), brain regions may experience an unpredictable combination of demyelination, axon loss, gliosis, and inflammation, which could result in competing influences on the diffusion tensor (Alexander et al. (2007).

MD is a sensitive but rather non-specific measure that can be affected by any disease process that affects the barriers that restrict the motion of water, such as cell membranes. (Clark et al., 2011).   

In your linked article (Hughes et al., 2012), the only thing they really say about the MD is 


  MD increased in both thalamo-frontal and thalamo-parietal regions with increasing age [...]. These observed changes [in] white matter tracts occur in parallel with an age related decrease in frontal cortical volume and the volume of related thalamic regions.


Indeed, I think in itself the change in MD tells you only that something has changed and that the MD may be a predictor for aging in the thalamocortical system.  

References
- Alexander et al., Neurotherapeutics (2007); 4(3): 316–29
- Chi, The Scientist (2014)
- Clark et al., J Psychiatr Res (2011); 45(7): 980–8
- Hughes et al., NeuroImage (2012); 63 (3): 1134-42