In this context, it usually means reducing waste and consumption by prolonging the useful life of hardware. By providing an updated user land (and, in some cases, a mainline kernel) after vendors lose interest, users aren't forced to choose between buying new hardware and software obsolescence and/or security issues.

In the software sense, sustainable software is software that can be maintained. That means in practice not to have thousands of forks of the same piece of software (like it is done with the Linux kernel in Android). Instead, sharing as much of the same codebase and binary packages as possible across all devices just like it's done in a typical Linux distribution.

I think its about extending the lifecycle of the hardware. By extending and expanding software support for smartphones, they can potentially have a much longer useful life.