The term refers to the highest realm of human integrity and morality, hence one who has reached this state is a sage. It is often used in relation to "wisdom,” since one who is a wise man understands the way of man, while one who is a sage understands the way of heaven. Thus a sage with knowledge of the way of heaven will interact successfully with other people.

Citations:

He who listens to the principles of men of virtue is wise; he who not only listens but also understands them is a sage. The sage understands the way of heaven. (Wuxing, from the bamboo slips unearthed from a Chu State tomb at Guodian)

Confucius was a sage who was able to seize the opportunity of his era. (Mencius)