Well, basically it's a "home rule" doctrine from the California State Constitution that reserves to Charter Cities the right to adopt local ordinances that conflict with state laws, provided that the subject ordinance is strictly a municipal affair.  So, it doesn't allow cities to do "whatever they want", but it does give them a lot of flexiblity.  If you want more info, check out the Article 11 of the State Constitution (especially Section 5a) by clicking on the link below

• Article 11 California State Constitution

• Charter City Project