Actual cash value is another term that means something different from what you'd think it naturally means. It should therefore not be a surprise that the idea comes from the insurance industry.
ACV is not what you can expect to get when you sell your car. (Price is not value and vice versa.) Instead it's a calculation based on replacement cost minus depreciation, or how much of a projected life the item has already lived through, and is used to figure payouts on claims.
Say your beloved set of wheels gets totaled or stolen. The insurance company will take the value of replacing that ride and subtract a certain amount based on how old it was, what kind of condition it was likely in at the time of the incident, and so on. Insurance companies usually have a depreciation scale for most big-ticket purchases like cars. If an accident happens on the way home from the dealer right after you pick up the keys, depreciation is minor. After a few years, though, your vehicle's ACV has dropped and your settlement will be much less than the true replacement cost.
In general, read the details of your insurance policy to understand your different options for settlement if you have to make a major claim.