When trying to analyze an animal’s body language, each signal must be taken in context. Other body language signals should be analyzed as well to form as complete as possible view of the animal’s intent or emotional state. You can generally characterize signs in 3 categories: go, stop and yield.
Generally, the crouched position is one of defensiveness, self protection or fear. It is a yield sign. That means that interaction with a cat in this position could end well or poorly. At minimum, the cat is uncomfortable with the situation. The crouched, lying position involves folding the feet underneath the body and often the tail is curled around the body.