Whole home context is where your smart home has visibility of everything and anything connected to it. In practice this means the Home Control System is the central point to which all sensors send their data, all devices and appliances report their state and where all decisions are made centrally, to control appliances and devices.
It is also the place where the smart home and all of the things within are modelled and where all the context and state data is stored. This includes the models for everything in the smart home and also the users of it. This includes real-time events, historical events and state information. It could be considered the smart home's memory if you like.
When the smart home has whole home context it can make much more intelligence decisions and take the most appropriate action, to ensure the best possible user experience. It requires 3rd party products and services to be fully integrated using their published (and ideally local) API.