"Blue" is shorthand for the original finish of the rifle. Bluing refers to a type of metal finish that is common on firearms, and which all but some late war K98ks used. Without getting into the details, it's a controlled oxidation process that uses various chemicals to put a finish on the gun that protects it somewhat from rust, although obviously it will still rust if left wet/dirty/etc. The "blue" part is a rough description of the color that it produces, and is in contrast to "browning," a similar but older process that creates the kind of matt brown finish that you'll see on a lot of much older guns like muzzle loaders. edit 2: Just for the sake of completeness, the other period finish would be "park" or "parkerization" which is an American trade name for phosphate conversion coating. Rather than relying on controlled oxidation/rusting of the underlying steel, this method deposits a thin layer of iron, zinc, or manganese phosphates onto the underlying steel. It's what produces that distinctive green/grey finish that you see on M1 Garands and other WW2 and later American weapons. You also see this on some later war German firearms, and it's what the K98k eventually moved towards, although some factories were still bluing at the very end.
"Rebluing" is when someone puts a new finish on the gun. This is generally considered undesirable by collectors because we value getting the weapons in their original condition, warts and all. A lot of people want their personal firearms to be as pretty as possible, however, so they'll have the finish redone for cosmetic reasons. If the finish had some wear from the guy who carried it originally, and then it picked up a bit more being used for a few decades as a deer gun? Yeah, a lot of guys took their war trophy around to the local gunsmith to get the finish redone. You also see it being done by collectors in the 70s - 90s, in the name of "restoration." Same with sanding and chemically cleaning the stock (which I note as your stock has at the very least been sanded). Again, something that collectors today really don't like, but which was common back then. There's a similar situation with classic cars if you've ever gotten into those: someone with a '68 Mustang in 1988 is going to be tempted to get it re-painted if it's started to fade or there is some other damage, but someone in 2018 would value a "survivor" car with the original paint far, far more.
edit: note that gun finishes are notoriously hard to photograph. Take the advice given up-thread and get some more photos in diffuse, natural light without a camera flash. Outdoors on a bright but overcast day is ideal, but you can fake that kind of diffuse lighting by pointing a couple of floor laps at the corner of a white wall and taking pictures in the reflected light.