[Fizzlemizz]

I don't use HandyNotes so I don't know all the ins-n-outs.

The iterator is cycling through your points table for the current map id. (23 [EPL] in the table in your code).
for each successful

next(...)

state will be the coord id. (number eg. 27592144 or 15606640) and value will be the corresponding sub-table in points[uiMapId]

To work the function would look more like:

local get_the_best_icon = function(point) -- point is the coord sub-table
    if not point then return end -- should never happen but...
    local relevant_icon = point["icon_type"]
    local completed_icon = "complete.tga"
    local folder_dir = "Interface/AddOns/HandyNotes_EfficientSee/Icons/"
    if task_id == "skipme" then -- task_id not really usable here as it stands so a re-think needed.
            local show_icon = folder_dir..completed_icon
            return show_icon
    else
            local show_icon = folder_dir..relevant_icon -- This will prolbably be the only icon returned
            return show_icon
    end
    return show_icon -- will never get here because of the if/else nature of the stgatement above.
end

If the function is being used elsewhere you would use something like

if points[whatevertheMapIdis] and points[whatevertheMapIdis][whatevertheCoordIdis] then
    local icon = get_the_best_icon = get_the_best_icon(points[whatevertheMapIdis][whatevertheCoordIdis])
    -- do whatever with the icon
end