What does ˇ (haček) in *ě 'yat' mean?
When linguists started working with Old Church Slavonic, they weren't sure exactly how the yat was pronounced (since it had shifted in different directions in different daughter languages). But they also needed some way to represent it in their transcriptions. The same happened for the "shortened vowels" that are now known as "hard sign" and "soft sign" in Russian.
Fortunately, phonemic symbols are pretty much arbitrary. There's a convention to use IPA characters for them, but it's not by any means required: see PIE's
*h₁ [h] and Proto-Semitic's
So for the shortened vowels they just used the Cyrillic characters directly, and for the yat they chose
ě. Why? Because in Russian it's turned into
/e/, but it clearly wasn't originally the same as
e with a diacritic seemed appropriate. The haček is also often used for palatalization, which might be why it was chosen specifically (since the yat caused palatalization in some daughter languages).
EDIT: As Wilson points out in the comments, there could be a simpler explanation. In Czech, one of the Slavic languages that uses the Latin alphabet, the reflex of yat is sometimes written
ě. So that would have been an easy source to draw from.