"is" refers to the sum total of physical existence. basically the argument is saying that the physical world does not contain anything that would give rise to a moral rule, ie. something that would be preceded by the word "ought". let's flesh this out a bit. when you say that someone ought to do something, you can only make sense if that person is capable of doing what you suggested. if i say "You ought to fly to Mars unaided", i have made a nonsensical statement, as "ought" makes no sense unless the subject is possible. however, it cannot be the only possibility, ie. there must be something which you "ought not". if you only have one option, then "ought" makes no sense. for example, "you ought to breathe" makes no sense, as you have no choice (in normal situations) about whether you breathe or not. so for ought to make sense, there must be a choice between two possible actions. of course, one of these actions can be doing nothing: the point is that you can either do A or B, and we are saying that the morally correct thing is to do A. now, in answer to your question, the physical world is described in terms of mechanisms, ie "when A occurs/is true, B follows" or some similar statement. there is no physical rule that can tell you "when faced with two options, it is morally correct to do A". they can tell you the consequences of your actions, and therefore inform you in order to let you decide, but they cannot actually answer a moral dilemna for you. for example, if i know that if i do A, then as an inevitable consequence a little child will die brutally, i still haven't got any reason not to do A. only because i consider brutal murder to be wrong (for whatever reason, under whichever system of morality: that is not the point here, don't start talking about relative morality) that i can make a rational choice not to do A. this is essentially the "ought from an is" argument, precede by a load of my own personal musings about morality. take it or leave it.