What is the "launch" action?

"Type /launch #betalist to launch your product on WIP. You can only do this once per product."

I was wondering what this is for. Does it mean a project is live or will go live?

It means when you are going to launch your product. You can only launch it once.

It just sets the date you launched your product on, and announces it to the chat. It does not alter any internal state of the product in WIP, afaik. Say you're planning to launch your product on X day. You type /launch #yourproduct to announce you're launching it and mark it as "launched". Then in the product page you'll be able to see the launch info, like "Launched mm dd, yyyy" (see for example)