The earlier instance of his tattoo appearing was during the episode "Angel" (1997); he never appears shirtless in any flashback. After it, the tattoo is only ever mentioned to identify Angel as himself, like when Wesley recognizes him in "Through the Looking Glass." So it's really never explained.

But the tattoo also appears in the comic Blood & Trenches #1: Over There, that takes place during World War I. The story was was never confirmed as canon, but here's what it says:

Nurse: "Oh, what an interesting tattoo. What does it mean?"

Angel: "I... don't really know. I got drunk one night, and the next morning, there it was."

But, of course, Angel might also be lying...

Thanks for the answer. I don't know how believable I find that response. With "drunk" he might allude to his period as Angelus