Faith alone (sola fide) is a statement of the Reformers that summarizes their doctrines of justification. It means that a person is found just, or righteous, on the basis of their faith in the identity and testimony of Jesus, and not on the basis of their works, office, parentage, or any other characteristic of the individual.
From the Lutheran Church (Augsburg Confession, Article IV),
Our churches by common consent...teach that men cannot be justified before God by their own strength, merits, or works, but are freely justified for Christ's sake, through faith, when they believe that they are received into favor, and that their sins are forgiven for Christ's sake, who, by His death, has made satisfaction for our sins. This faith God imputes for righteousness in His sight.
Of chief concern is that good works are not required to be saved, but faith alone is sufficient. In Protestant theology, good works are an effect of salvation, but are in no way a cause of salvation, since in that theology the cause and action that bring about salvation are found in God.
The statement certainly does not mean that faith alone exists, or that faith alone is evidence of the work of Christ in the life of the believer.