The word "bones" indicates that this will be a story about death. At first glance, the juxtaposition of "bones" and "lovely", two incongruous words, would suggest irony--a sarcasm that means that the bones are not really lovely--but a quote near the end of the novel reveals that the title is sincere and captures a core message of the book:
These were the lovely bones that had grown around my absence: the connections—sometimes tenuous, sometimes made at great cost, but often magnificent—that happened after I was gone. And I began to see things in a way that let me hold the world without me in it. The events my death brought were merely the bones of a body that would become whole at some unpredictable time in the future. The price of what I came to see as this miraculous body had been my life.
The "bones" the title refers to are Susie's body (such as the elbow that is found), but, more profoundly, they also refer to the new life--the new structure of community that grew up and developed after Susie's death. They are the "connections ... often magnificent" that formed from grief, a new organism. As Susie, watching from the afterlife, realizes this, she is able to let go of having to live life in the world: she is able "to hold the world without me in it." From her death, new and lovely life has emerged, the new "body" of her family grows without her.
This larger perspective--a perspective that encompasses an afterlife and the consciousness of the dead looking down on us from heaven--brings comfort and this comfort is captured in the title.
The title of the novel has thematic significance pertaining to the theme of grief. The bones are “lovely” because they are what remain of the narrator who was deeply loved by and loved and continues to love her family, as they do her. From her position after death, she watches her family grieve, even as she grieves herself, and while she cannot change the events in life, her observation of them adds to the healing process, both hers and that of her family. While “bones” suggest death, the narrator seems very much alive throughout the story, and the word “lovely” contributes to this. We tend to think of death as something frightening, and the bones of the dead as something to avoid, but by calling them “lovely bones” the author changes these connotations, softening our dread of death. Indeed, as the commentary at the link provided below explains, the author blurs the lines between what constitutes life and death” by having a dead narrator tell the story.