Can anyone please help me to understand about what's going on?
Yes, it is nice that we can look up our entries on the FIDE rating website but actually there is a business need for this information for arbiters and tournament organizers to avoid fines from FIDE.
Whenever a FIDE rated tournament is rated by FIDE (standard time control only because rapid and blitz, for the moment are free) FIDE charges the federation 1 euro per player for Swiss tournaments and lower rated (average rating < 2230) round robins. The full details are given in Appendix 2 of the FIDE 02. Financial Regulations / Financial Rules (effective from 1 Jan 2021) document.
Each of the players must normally be registered with one of the federations and those federations also pay FIDE an annual membership fee which is detailed in Appendix 1 of the above document. All national, over-the-board players are normally registered with a federation and so are regarded as licensed. In exceptional circumstances, e.g. a player seeks asylum, a player may for a time be without a national federation and be registered with FIDE as their federation until they settle on a new federation.
Additionally FIDE has its Online Arena where players can register directly with FIDE and play online. Online players who aren't already registered OTB with a federation get a FIDE online registration. This licenses them to play in FIDE's Online Arena but does not license them to play rated FIDE OTB tournaments.
Normally players pay a registration fee to their national federation which covers them for playing FIDE rated tournaments. If players could register directly with FIDE for free and still play OTB FIDE rated tournaments then this would deprive the federations of the money they need to operate.
Therefore if your federation is FIDE (for whatever reason) then you need to pay FIDE a registration fee (which ideally is more than you would pay a normal federation) before you can be licensed to play OTB.
These rules regarding licensing are defined in the FIDE document Regulations on Registration & Licensing of Players / Regulations for Registration & Licensing of Players (effective from July 1, 2015).
Here are some useful extracts:
2.5 Players with no Federation are automatically considered to be ‘FIDE flag players’ and their website profile cards indicate FID as their Federation.
2.6 Players registered as FID are provisionally licensed to play over the board rated tournaments after paying the ‘FIDE license fee’ of 60 euros. ‘FIDE flag players’ are encouraged to join a National Federation rather continuing to play as FID.
2.7 The provisional license under FIDE flag expires on 30 June of the following year.
2.8 Before 1 July, the license must be renewed with a payment of 60 euros to FIDE, without further notification from FIDE, failing which the license is annulled.
2.9 ‘FIDE flag players’ with a valid provisional license are referred to as ‘licensed’ on their FIDE website profile cards
If an arbiter or organizer submits a tournament for FIDE rating which includes one or more unlicensed FID players then the federation has to pay the license fees, basically a fine. Hence this information (licensed or not) is vital for arbiters and organizers.
Here is the FIDE profile for one of these unlicensed players, Abbagouni, Raja. You will see that in the top right hand corner it says:
Not Licensed Player.
Extra fees for tournament Organizers are applicable.
Please refer to FIDE Handbook or proceed to get license