It's important to state from the outset that there's no definitive answer to this question. As a previous contributor has rightly noted, Kurtz is an enigmatic character, and so, inevitably, many of his words and actions are also suitably enigmatic. Thus any possible meaning we attach to his infamous postscript is purely speculative.

One possible interpretation of "exterminate all the brutes" could be that Kurtz, in a final moment of clarity, has recognized the unspeakable barbarism of the natives among whom he has lived and has ruled as their undisputed tribal chieftain. He has seen at first hand the darkness, the savagery and the sheer moral degradation of the natives; worse still, he has succumbed to their atavistic bloodlust. Although the natives worship Kurtz like a god, he is the one whose soul has been corrupted by contact with a strange, exotic culture; in a sense, the natives have ruled over him.

On this reading, then, Kurtz's final postscript serves as a warning for white Europeans not to become too deeply involved with the natives lest they lose their souls. He is not advocating a campaign of genocide or ethnic cleansing; he is simply urging his fellow members of the "civilized" world to suppress their more primitive urges, their "brutes," if you will: the urge to acquire more land; the urge to exploit the natives; the urge to impose European standards upon distant lands with their vastly different cultures and traditions. In short, Kurtz's last words constitute a forlorn, desperate plea for the discontinuation of the colonial project.

Kurtz, in the end, is a rather enigmatic character. This goes for his writing and his last words as well. Along with "the horror, the horror" his scrawled statement "exterminate all the brutes", Kurtz' character is terminally associated with a madness that stems from a seemingly complete moral dissolution. 

Isolated in the jungle and left with only his vast ambition as a final vestige of his old ("civilized") way of thinking, Kurtz has gone from a man poised to educate the natives of the Congo region to one prepared to commit the greatest atrocities and wipe them out. 

...loneliness and alienation have taken their greatest toll on Kurtz, who, cut off from all humanizing influence, has forfeited the restraints of reason and conscience and given free rein to his most base and brutal instincts.

As he falls into his final madness, Kurtz' vision of himself becomes more and more grand until he ends as a failed god, unable to construct a new morality, unable to save or conquer, and ultimately alone and stripped of any meaning.