Suppose there is a function which takes one argument.  If an unset variable is passed to the function it is reported as not being set, but it is reported as being a string.

For example:

function foo($var) {
  if(isset($var)) {
    echo "Argument is set.";
  }
  if(is_string($var)) {
    echo "Argument is a string.";
  }
}

foo($nonExistentVar);

This will output:

Argument is a string.

Thus, PHP considers $nonExistentVar to be both unset *and* a string at the same time.