Well, various people probably mean somewhat different things by that, but to quote the PM's meaning:
as our chief negotiator David Frost said, there are some things that we simply can’t compromise over. People understand the arguments about the level playing field and about fisheries. And there is no point in leaving the EU if you remain locked in the lunar pull of the EU and you are unable to do things differently.
In the early 1970s we basically handed over control of our fisheries. We gave up our fisheries in the last throes of the Heath negotiations in a way that permanently disadvantaged UK fishers and Scottish fishers and now is the time to change that and change that back.
This isn't too far from e.g. former Brexit Party MEP Ben Habib's position...
Take back control of our laws, our borders, our cash, and our fishing. You cannot compromise on that.
Now on the discussion surrounding sovereignty in re Brexit, some critics of these slogans have seized on an apparent admission from the (May) government:
In its White Paper published on 2nd February 2017, the government made the most astonishing admission in this regard. In a Chapter 2 entitled ‘Taking control of our own laws”, it admitted that: “The sovereignty of Parliament is a fundamental principle of the UK constitution. Whilst Parliament has remained sovereign throughout our membership of the EU, it has not always felt like that”.
The actual document cited continues with
The extent of EU activity relevant to the UK can be demonstrated by the fact
that 1,056 EU-related documents were deposited for parliamentary scrutiny in 2016. These
include proposals for EU Directives, Regulations, Decisions and Recommendations, as well
as Commission delegated acts, and other documents such as Commission Communications,
Reports and Opinions submitted to the Council, Court of Auditors Reports and more.
Likewise, the same argument was made more flowery as:
Lord Denning, a renowned English Judge, compared EU laws to an incoming tide turning into a tidal wave. These were his words:
Our sovereignty has been taken away by the European Court of Justice... Our courts must no longer enforce our national laws. They must enforce Community law... No longer is European law an incoming tide flowing up the estuaries of England. It is now like a tidal wave bringing down our sea walls and flowing inland over our fields and houses—to the dismay of all.
So, presumably, the "no compromise" argument over agreements that limit domestic policies is/was actually one of degree of intrusion. Or, if I may put it in more Trumpian transactional terms, it was an "unfair" or downright "horrible" deal to be in the EU because of this "tidal wave" of EU legal frameworks.
According to another (2016) analysis this "tidal wave" argument (i.e. degree of EU involvement in UK affairs) is practically the only new aspect of the Brexit slogans/disputes in this (sovereignty) regard compared to the Antis' arguments in 1975, which otherwise also centered on sovereignty:
In 1975, as in 2016, sovereignty was the core issue for the "Anti-Marketeers".
The slogan 'The Right to Rule Ourselves' was blazoned across their literature, while a pamphlet sent to every household in the country proclaimed that 'The fundamental question is whether or not we remain free to rule ourselves in our own way'.
Neil Marten, who chaired the 'Out' campaign, told journalists that 'While food and jobs are vitally important, the real issue is whether we vote away our political birthright ... There is no other issue'. [...]
This was sovereignty in its classical sense, defined by Enoch Powell as 'the right to live under no laws but those made by our own representatives; to pay no taxes but those imposed by our own Parliament, and to be governed by no government but that responsible to our own people'.
On the one hand, the constraints on national sovereignty are probably more potent today than they were forty years ago. [...]
Also, then and now, the less nuanced pronouncements were attacked by the other side, sometimes in blunt terms, e.g.
On 29 April 2016, former Prime Minister John Major said in an interview to the BBC: “If you want undiluted sovereignty, go to North Korea”.
“If Britain were to withdraw, we might imagine that we could regain complete national sovereignty. But it would, in fact, be an illusion. Our lives would be increasingly influenced by the EEC, yet we would have no say in decisions which would vitally affect us.”
So, if I may conclude something about this, "no compromise sovereignty" is actually an argument of degree when peeled down a bit, but with a lot of "uncompromising" rhetoric on top.