What does the seal on a contract mean and why?

I don't know of any contract in the U.S. that requires a seal. Certain documents, such as wills, may require notarization which includes both the notary public's signature and a stamp of his/her seal of office. Notarization is little more than proof to an independent party (the notary) that the person who is signing the document is who he/she claims to be, that he/she knew the contents of the document, and that he/she intends the document to perform certain actions, such as distribution of his/her estate.

A seal is to authenticate the contract, like having it notarized.

Not really an estate planning question. Corporations used to have seals; most don't now.

Seal is an old common law term. Its original meaning was the personal stamp of one of the parties. Hot wax and the stamp made the seal that authenticated the party to the document. In modern times it has the same meaning as a parties signature ant the authentication of that signature by a witness or notary public.

There are two types of seals on contracts and both of them are archaic and haven't been required for decades. One type is a vestige of pre-1900 stamp taxes. Contracts were not valid unless the proper parties bought the stamps from the government and stuck them on the contract. The stamps were a percentage of the value of the contracts. The stamps on contracts were called seals. The second type is a corporate seal, which was a metal stamp which was embossed on the documents. Most people were illiterate back in the day and the corporate seal was used instead of a signature on all contracts. Later, only documents that were deemed important, such as deeds or stock certificates were only valid if they had the corporate seal impressed on them. To the best of my knowledge all US jurisdictions have abolished seal requirements in private transactions and all contracts are valid without seals of any kinds. Seals are used today to make something look fancy and important: college diplomas bear the seal of the school, state laws bear the seal of the state, awards and licenses often have some kind of seal.