Interpretation is the next step in analyzing a work of art. You already know how to do a formal analysis. You're also aware of the context of a work of art now. Interpretations are the conclusions you draw after you apply contextual facts to a particular artwork. It is what you do next with all of the knowledge that you've acquired and brilliant observations you've made.
Interpretation is a very personal thing.
It's also a profession. Art historians are professional art interpreters. They put a tremendous amount of effort into locating, verifying, and accumulating information about the context of a work. Then, with that body of knowledge, they interpret the art image or object. This idea means that they apply the facts to what they see in the picture or sculpture.