It also mentions the Peggy+, which plays MP2 only.
I think, from the wording, it just means that it supports mpeg.device. Although, you can never be sure based on just grammer given that English isn't first language to most of the world.
mpeg.device is an older system to support FMV hardware, which as a sideline also of course does MPEG audio. But due to age, with most hardware you're limited to the older standards as used in Video CD.
The CD32 FMV module, like my Peggy+, pre-dates MP3 by quite a bit.
