It means that if anything was to attack with a melee attack you (not a spell, or range attack) while you had that shield equipped, they would take damage.
The "based on Clvl" means the damage goes up based on your character level. At lvl 1, it would be around 1 damage, and at lvl 99, it would be 136. Of course, you won't be able to equip it until lvl 70 anyway, at which point it would do about 96 damage to any attacker.
In my opinion, it's pretty pointless, as the damage doesn't get high enough, and it requires the enemy to actually attack you in order for them to receive the damage. If you want to damage people when they attack you, your probably better off looking towards some sort of Iron Maiden (the necro curse) build, Paladin thorns aura or Druids Spirit of Barbs build, though I haven't heard too much success with those either in PvP.
Although I have no experience in PvP, I don't see any reason why it wouldn't trigger against another player who attacks you. Though, it would no doubt be subject to the 1/8th damage reduction that happens to all attacks in PvP.