On thing to keep in mind is that REO foreclosures tend to have legal addendums that buyers are required to sign (e.g., sellers will make no repairs, utilities are off and will not be turned on). Otherwise, if this is just a "normal" listed home, "as is" has no special legal significance.
What it does is signal to agents (and buyers) that the home is probably in poor condition, or at least there are significant defects the seller does not intend to address. I advise "normal" sellers not to say this. Effectively they're unilaterally starting the negotiation before there's an offer, and scaring away buyers for no good reason.
It's an ambiguous signal at best. Maybe it means the seller is an old curmudgeon who won't budge an inch on anything. That is one possible interpretation. Or maybe it just means the seller has already moved out of state and can't do repairs -- but would still be amenable to repair credits based on reliable estimates. In that case, how is it different from any other house?
Any significant condition issues should be on the disclosure. I put that online, and buyers should ideally review that before making an appointment. If the seller is in the middle of working on something or has definite plans to address something on the disclosure proactively, I would tell agents that when they call for appointments.
Sellers shouldn't be making repairs anyway, if they don't want a judge deciding whether their repairs were made in a "workmanlike manner" as required by the contract. The safest thing for all parties is to get estimates and either give buyers a credit (lender/seller assist-permitting), or have title cut a check directly to the contractor. Then the buyers handle it after closing and there is no liability. Alternatively, if the buyers *really* don't want to do work, have the work done *during* the inspection period (extending it if necessary), and let the buyers reinspect before their final reply.
For buyers, I say just ignore any "as is" claims. Sellers may truly believe at listing time that something isn't negotiable, but may well change their minds as soon as there's a concrete offer on the table. There is nothing stopping buyers from asking for credits anyway, and nothing stopping sellers from offering them.