Aside from the fun lighthearted jokes fandom has been making about everyone who is a fanfic author there being a Hugo nominee and such and basking in the ridiculous nature of it, this is also quite a big deal because this is a fanfiction website being nominated for such an award. Obviously there's a lot of factors that go into the reasons why AO3 was chosen as a nominee (specifically structurally as a website), but it just goes to show how far we've come in a sense. I mean, correct me if I'm wrong, but previously if a fansite was being nominated for something it usually was just an online award from another website. Plus, fanfiction and fandom in itself has become more recognized in pop culture in recent years, since before it was more underground in the "what happens in fandom stays in fandom" kinda way. While this can still be misunderstood and misused at times by outsiders, it's still pretty damn awesome how far fandom has come, and how fanfiction is becoming more widely accepted.
Also, AO3 is probably one of the best fanfiction archive sites out there, not just in layout structure and usability but also the reason why it was created in the first place. The entire history of its creation is a fascinating one, and one that I was present for during the time it was happening as well. I witnessed firsthand the transition and formation of the site, and it's absolutely amazing how far it has come, not just with this nomination, but overall as a non-profit site continuing to function and improving itself, and being a creative outlet that protects its users. I deeply respect the AO3/OTW team and everyone who has contributed to the site, from the fanwork to the volunteers to those who donate to keep it running. So regardless whether it wins anything, it's still awesome that it was even nominated in the first place since it absolutely deserves the recognition for the incredible hard work people have placed into it. I'd say either way, it's a win for fandom.