If you go back to the undergraduate study of the 3d harmonic oscillator, you can check that $n=2$ states contain $\ell=2$ and $\ell=0$ states. And yes, it means precisely what you think: you can organize the $n=2$ states to one is fully invariant and the remaining 5 transform amongst themselves under the action of $\mathfrak{so}(3)$
The example is important because it illustrates the difference between $\mathfrak{so}(3)$ and $\mathfrak{su}(2)$. Whereas the algebras are isomorphic, they "sit" differently inside $\mathfrak{su}(3)$. Irreps of $\mathfrak{so}(3)$ must have integer angular momentum, whereas irreps of $\mathfrak{su}(2)$ can have half-integer value of $j$.
In particular, the defining representation, of dimension $3$ and with Dynkin label (1,0), contains a single irreducible representation $\ell=1$ of $\mathfrak{so}(3)$ but a direct sum $\frac{1}{2}\oplus 0$ of $\mathfrak{su}(2)$ irreps. Inside $(1,0)$, the $\mathfrak{so}(3)$ generators are such that $iL_{k}$ is a real antisymmetric $3\times 3$ matrix, whereas of course the $\mathfrak{su}(2)\oplus \mathfrak{u}(1)$ generators form $2\times 2$ blocks.
The adjoint representation, of dimension $8$ and with Dynkin label $(1,1)$, contains $L=1$ and $L=2$ $\mathfrak{so}(3)$ generators: they are linear combinations of the root vectors. On the other hand, the $\mathfrak{su}(2)\oplus \mathfrak{u}(1)$ contents is found by identifying roots with generators.
An alternative way of stating this difference is that the $\mathfrak{su}(3)\downarrow \mathfrak{so}(3)$ branching rules are not the same as (and much more complicated than) the $\mathfrak{su}(3)\downarrow \mathfrak{su}(2)\oplus \mathfrak{u}(1)$ branching rules. In particular, for multi-particle states, there are "missing labels" when using the $\mathfrak{so}(3)$ labelling schemes, whereas $\mathfrak{su}(2)\oplus \mathfrak{u}(1)$ provides enough labels to completely distinguish states.
A lot of applications of $\mathfrak{su}(3)\downarrow \mathfrak{so}(3)$ were pioneered by
Elliott JP. Collective motion in the nuclear shell model. I. Classification schemes for states of mixed configurations. Proceedings of the Royal Society of London. Series A. Mathematical and Physical Sciences. 1958 May 6;245(1240):128-45.
Within this model, the $L=2$ generators are identified with the quadrupole moments, while the remaining $L=1$ generators are angular momenta. Thus, the model can predict quadrupole transitions between angular momentum states of nuclei when $\mathfrak{su}(3)$ is a valid global symmetry.
An expression for the quadrupole and angular momentum generators can be found in
Rowe DJ, Le Blanc R, Repka J. A rotor expansion of the su (3) Lie algebra. Journal of Physics A: Mathematical and General. 1989 Apr 21;22(8):L309.