What does full-thickness cartilage loss of the weight bearing lateral femoral condole and lateral plateau posteriorly with subchondral edema mean? does this indicate surgery? thanks?

You've severe osteoarthritis of the knee but there is absolute indication for knee replacement surgery. The indication depends on the duration of your knee problem, symptoms, any significant impairment in your ambulatory status and what treatments you have had before. Your orthopedist is your primary advisor and you can always seek a second opinion if you have doubt treatment plan.