The decision from the United States Court of Appeals for the 9th Circuit breaks from roughly a century of precedent under the controlling U.S. Supreme Court decisions which had held that the Second Amendment's right to bear arms did not apply to state and local governments. The U.S. Supreme Court's recent Heller decision which for the first time authoritatively enunciated the Second Amendment as an individual right to bear arms for self-defense reopened, but did not resolve, that question as it arose in the District of Columbia.
It remains to be seen if the U.S. Supreme Court will itself address the issue. The United States Court of Appeals for the 2nd Circuit reached the opposite conclusion earlier this year, so the two decisions have already established a clear split of authority between the circuits on the issue, a factor which makes the already likely issue for U.S. Supreme Court review (because it involves core issues regarding the status of a newly defined constitutional right) even more likely to be taken up by the nation's highest court. The Second Circuit case poses a better vehicle for cert review than the Ninth Circuit case, however, because the Ninth Circuit went on to find reasonable and valid the fairground gun possession regulation, which it noted was inspired by "Columbine High School in Littleton, Colorado" (in a decision released on the 10th anniversary of that event), which makes the Ninth Circuit decision dicta to some extent while the question of applicability to the states could actually change the outcome in the Second Circuit case.
If the decision is affirmed, it opens the door to a wave of lawsuits challenging state and local gun control laws, although on the merits, the U.S. Supreme Court's standard for constitutionality enunciated in Heller and interpreted since then in lower federal courts sets a low bar that the vast majority of state and local gun control laws are likely to be upheld under as reasonable regulations of the individual right.
I am among those who think that siding against application of the Second Amendment to the states (a doctrine known as incorporation) would be the more legally correct ruling, because the standard for incorporation, which is essentially whether the right is "necessary to an Anglo-American regime of ordered liberty," is not met. Many reasonably well functioning democracies, including Anglo-American ones (like Australia, Canada, Japan and the U.K.) have very strict gun control that would not survive Second Amendment review, even though other democracies (like Israel and Switzerland) have widespread private gun ownership. Under similar reasoning, the right to a civil jury, the right to a unanimous criminal jury in non-capital felony cases, and the right to a grand jury indictment have been held to not apply to the states. Then again, many functioning democracies have established religions, but the first amendment establishment clause does bind the states.
Eugene Volokh (a strong advocate for second amendment incorporation and well known libertarian leaning law professor) agrees that the Anglo part of the Anglo-American legal regime long ago abandoned the right to bear arms for self-defense, but argues that it is the articulation of the legal test (itself inconsistently applied in the past) that is wrong, rather than the application of the legal test to this question.