According to the Constitution, where did sovereignty reside? What did this mean to colonists of the period?

Sovereignty resides in the individual who should be autonomous from monarchy, aristocracy, or oligarchy. This meant that colonists need not bend to the wishes of a British monarchy or an institution not elected by the people. 

A Democracy is, “That form of government in which the sovereign power resides in and is exercised by the whole body of free citizens directly or indirectly through a system of representation, as distinguished from a monarchy, aristocracy, or oligarchy.”

 “In a republic the group only has advisory powers; the sovereign individual is free to reject the majority group-think.”