It means an economy based on "knowledge workers" rather than industrial age laborers.

"the second meaning, more frequently used, it refers to the use of knowledge to produce economic benefits."

"A key concept of this sector of economic activity is that knowledge and education (often referred to as "human capital") can be treated as: - A business product, as educational and innovative intellectual products and services can be exported for a high value return. - A productive asset"

Its a fallacy that all knowledge is free. Localized, and application specific knowledge, are definitely not freely available.