When Hindus talk about a divine incarnation, they mean somebody who is the actual vehicle by which God himself appears, manifests himself on the earth. Such a being has no past, he is not subject to the wheel of birth and rebirth—he has no karma in this sense, he simply manifests himself to do good to the world. He is, if you like, an expression of the world’s need at any particular moment. He manifests himself and gives through himself power, which is then transmitted and gradually begins to work within Society.
This link leads to a helpful and interesting article attempting to explain Hinduism and the status Ramakrishna has for the author.