Thanks for this.
Not necessarily. It could mean he just had a bad test day, it could mean he hasn't been taught the material, it could mean his score was artificially low because the test was timed and he's not a rapid-fire-fast kid with calculations, or it could mean he's just not really that interested in math and hasn't moved ahead in achievement by leaps and bounds. *IF* you are seeing a discrepancy in test scores (achievement vs ability) *and* issues with his academic performance or other things going on that appear to be challenges either inside or outside of school - then I'd look into the possibility of a learning disability or some other type of challenge.
I suspect that a big chunk of it is that he just wasn't taught the material. But what's bothering me a little is that he does love math, works 1-2 years ahead in school and at home and craves a challenge, yet he mentioned that some of the problems on the test were "impossible" -- he keeps mentioning the problem that he swears required a negative answer but there was no such option. Is this lack of experience with multiple choice tests, or inability to understand the directions? Failure to read carefully? Assuming complexity and overlooking simplicity? I don't know.
When he was 6, I read The Hobbit to him and every night when we started back up he could narrate back what had happened in the previous chapter. Months later he could recall small important details, and now he still recalls the plot -- even for sections that weren't in the movies.

At just-turned-8, his current independent reading is Harry Potter (just finished PoA, I am stalling him from starting GoF) and Ender's Game. So why did he only score in the 59th percentile for Language, the 71st for Reading?
These are the things that are flummoxing me.
What grade is he in? Are the gifted services something he would benefit from?
I have no knowledge of your school district, but in some districts, it's possible to appeal this type of decision if you have independent testing that can be used in place of the CogAT or ITBS scores. I'm also not sure what the SIGS is, but how did he score on that? Is it a rating system? Does his teacher believe he should be in the gifted program? A teacher's advocacy also goes a long way in our district - as well as parents who advocate for their children. It definitely helps to have data to back up your advocacy though!
He's in second grade, and since it's a brand new program I don't know what benefit it would offer. We'd been hoping that it would be a way to connect with peers, other "kids who love learning" as we call it (he has been isolated as "the smart kid" in every classroom situation since the beginning of first grade), and that there might even be some guided interest-led work on science, math, and reading (DS was eagerly hoping for "work at his level" ie. without concern for grade segregation.) But if they really don't expect to offer services to more than 1 student district-wide, there's no peer group there, and probably nothing there for us even if we muscle in. I did also somewhat hope that qualifying would give us room to talk about getting EPGY materials or similar in the classroom, since the district would theoretically be able to access extra funding for gifted education at that point. No hope of that now.
However, his sister is even more academically advanced than he is. I worry for her opportunities as well.
The SIGS is a nationally normed survey for parents and for teachers. They haven't given us that result yet, but we had teacher conferences last week and his teacher seems impressed with him. I wouldn't be surprised if she scored him highly. (I scored him as honestly as I could, and tried not to inflate my judgment, so he didn't stand out very much per the survey questions. He's a thinker, not a leader, and his ongoing speech issues preclude a precocious grasp of vocabulary and grammar. C'est la vie.)
I don't plan to pursue independent testing unless it's for the purpose of identifying a learning disability we can help him with.
I think at this point I'm just going to step up the outside work we do with him, and try to be more observant about whether there's something else going on.