Most probably your scale is using bioelectrical impedence analysis (BIA), which measures a change in electrical current that is in theory proportional to the the water density of the body i. e. the proportion of your body mass that can be attributed to water. By comparing the estimated water content to the weight measured, a calculation can be made to estimate the weight of the body related to fat content. Usually that will be expressed as a percentage:
body fat/ body weight x 100
The scale is trying to say that fat represents 17% of your body mass.
http://en.wikipedia.org/wiki/Bioelectrical_impedance_analysis This type of measurement may or may not be accurate for a given individual, even if done with the best available equipment. If it is consistent (repeatable on multiple measurements) for an individual, it may show some real utility in determining if weight loss or gain is due primarily to fat or muscle changes. Building muscle mass (lots of water) will show up as a relative lowering of fat %. so at least it has the potential to discriminate between fat and muscle, which the BMI does not. The body fat percentage has been used in very few studies, so the ideal number is less well established. But 17 % would be in a healthy range by commonly quoted standards.
http://www.builtlean.com/2010/08/03/ideal-body-fat-percentage-chart/ If during setup of the scale you input your height into the scale/computer, it can give you an exact calculation of the BMI, which is a calculated surrogate metric that is usually correlated to obesity. Relating the BMI to the body fat percentage is not a simple calculation for an individual, and unfortunately the popularity of the BMI in research means that most of the inferences drawn from studies on obesity and health risks are only available for BMI correlations.