The dismissal is noted here.
The effect of this dismissal is that this case goes back to the trial court, presumably for a ruling on whether Measure R, which has passed, violates the California Constitution. This decision would then be subject to further appellate review. Alternatively, opponents of Measure R might file an original writ petition in the California Supreme Court (or I suppose, even in the Court of Appeal) asking for the legal issue to be resolved quickly, so that potential city council candidates will know whether current city council members are subject to a two-term limit or the new three-term limit of Measure R.
UPDATE: I understand from a reporter that Measure R opponents have said they will not appeal further. Someone else opposed to the term limits extension could bring a challenge, which I assume would start as a new case.
UPDATE 2: According to this press report, a new lawsuit may be in the works.
[note: an earlier version of this post incorrectly characterized the procedural posture of this case]