Printer is in PC mode and expects commonly available paper sheets of the less convenient size system. Not a very understandable way to say this on a 16x1 display, I would prefer alternating messages like
Ready: USB / LAN
Tray 2 out of A4 (or: Tray2 low on LTR)
Close, but not quite. PC stands for paper cassette, e.g. the tray you load the paper into. You're right about it referring to the paper size, though. PC LOAD LETTER just means "Put more letter-size paper into the tray."