John Dewey's full quote is this:

"Education is not preparation for life; education is life itself."

John Dewey was convinced that learning through doing was the best approach to education. Of course, a free exchange of ideas is part of this learning through doing since people do not learn from experience per se; they learn from reflecting upon their experiences. For Dewey, "experience" is defined as that which people think and perceive through the senses and then act upon.

Dewey was firmly convinced that education is not a sequence of "telling" about ideas and concepts; instead, it is an active and continual constructive process. When students are engaged in experiential learning, they have a personal investment in the process. Because of this personal stake in the learning process, students are able to connect what they understand with the world around them and be truly educated. This is much like carrying out an experiment and then reasoning about the outcomes of this experience. But there is no duality of the person and the environment; instead, the two are inseparable and influence one another. Thus, life is education, just as education is life.

Dewey's statement brings to light the need for real world applications to education.  As a Progressive educator, Dewey understood that education fails students if it does not link what is happening in the classroom to the world outside of it.  Better than most, Dewey understood the need to bridge theory and practice.  When Dewey argues the link between the two in "Education is life," he stresses the idea that learning in the classroom setting has to connect to the experience outside of it.  In this respect, Dewey stands alone because he understood that there is a fluid dynamic to both learning and consciousness and educational philosophy has to embrace both realities:

Life, for Dewey, began and ended in humans’ experiences; that is, humans using appropriate methods could successfully cope with life’s confusing, obscure, and indeterminate situations. The key to coping with such difficulties, Dewey insisted, was using insights to define problems, establishing a set of possible solutions, determining the likely consequences of each possibility, and then evaluating the best possibility through observation and experiment.

The challenges that "life" poses compels Dewey to believe that life and education have to be linked in order to bring out these complexities and unique nuances that will allow learners to navigate these domains with some semblance of success.