4k almost surely refers to it being 4k capable, HDMI 2, 4k Blu Rays, and extra horsepower for VR.
We knew before this rumor dropped, most likely the slim or revised version of the consoles were probably going to add 4k support. My guess is, it probably doesn't cost Sony or MS that much at all to modernize it a little, especially the CPU. I remember reading that Sony could upgrade the PS4 cpu after year in its release by 40% at no cost, due to the improvements in tech and just how damned old those jaguar cores are.
I don't think this PS4.5 if it ever comes out is going to be anywhere near as powerful as people are assuming. Its not going to be playing AAA games at 4k nor is it meant to. 4k just means, 4k capable. Revision was always going to come. Only obvious and natural they would make it 4k ready. The increase in power is going to be in line with how much they can increase the power while maintaining the cost, and my guess is, they can increase it a lot, due to some parts being so old that it's probably the same price to use newer parts.
Sure, not many people have 4k tvs, but Sony and MS are competing with each other, and there is no way either of them would just let the other own that huge marketing win. Look at what a meal Sony made out of PS4's barely noticeable superiority in graphics.