The concept is that internal abatement of emissions should take precedence before external participation in flexible mechanisms.
Article 12.3.b states that "Parties included in Annex I may use the certified emission reductions accruing from such project activities to contribute to compliance with part of their quantified emission limitation and reduction commitments under Article 3[…]".
The actual meaning of the principle has been heavily argued since the signing of Kyoto Protocol in 1997.
The COP/MOP is the body that represents the signers/ratifiers of the protocol and they have not been able to agree on a specific definition of the limit on use of flexible mechanisms.
The original text has been interpreted to mean that anywhere from 3-50% of emissions could be offset by trading mechanisms.