What does John 11:12 mean?

This statement corresponds to Jesus' remarks to the messenger who first brought news of Lazarus' illness (John 11:1–4). He sent back word to Mary and Martha that their brother's illness would not result in death. Lazarus' hometown of Bethany was close to hostile religious leaders (John 5:18; 10:39), and Jesus waited for two days after sending His reply (John 11:6). But now Jesus' reason for going, according to the prior verse, is to "awaken" a sleeping friend. So far as the disciples were concerned, Jesus was confident Lazarus would be fine and there was no need to visit him. When Jesus plans to go, anyway, they are understandably shocked and worried (John 11:7–8).

It's clear the disciples misunderstand Jesus' spiritual message, and confuse it for a purely physical one. This is common in Jesus' interactions with others during His earthly ministry (John 3:4; 4:11; 8:31–33). Many of His statements and pronouncements are only fully understood with the benefit of hindsight, and the influence of the Holy Spirit (John 2:19–22).

Jesus means that Lazarus has actually died, and is to be resurrected (1 Thessalonians 4:13–18). This misunderstanding is expressed directly in the following verse.