I have oil on a spark plug, what does this mean?

Both are right .start from the top down as far as tracing the oil trail. ? did the oil get on the plug when you removed like #2 states are all the plug wires/boots clean, dry and undamaged .DON'T use cheap parts! if your doing the labor yourself PAY yourself by buying factory parts. With new plugs and whatever else needed in ignition system run it for a few minutes .If the miss is gone good .If the miss comes back , let it cool a little and pull the plugs for inspection again.if the same plug is oil fouled again it's time to investigate further as the 'others' (I mean that in a nice way) suggest.compression test possible visual inspection with a scope(very smallcamera &light that you stick inside cylinder to see without removing cylinder head....WAY COOL!! and a huge time saver if you know what you are seeing and looking for. 'nuff for now good luck.

It could be the rings on the piston. You need to do a compression check.

ASE_TECH is right in his answer! that it could be the rings. However is the oil on the threaded part of the plug and around the electrod? Or is it all over the top of the plug and in the tubes where the plugs go? If on the top you need to replace the valve cover gasket and tube seals. Clean the plugs and the tubes.