I keep seeing the following koan:

A monk asked Zhàozhōu, "Does a dog have Buddha nature or not?" Zhaozhou said, "Wú".

What does this mean and why is it important?

More specifically: Does "Wú" mean "no" in this context, or does it mean "the question doesn't make sense and therefore cannot be answered"? I've seen both interpretations, which one is correct?