In a companion paper, we present the first spatially resolved polarized image of Sagittarius A* on event horizon scales, captured using the Event Horizon Telescope, a global very long baseline interferometric array operating at a wavelength of 1.3 mm. Here we interpret this image using both simple analytic models and numerical general relativistic magnetohydrodynamic (GRMHD) simulations. The large spatially resolved linear polarization fraction (24%–28%, peaking at ∼40%) is the most stringent constraint on parameter space, disfavoring models that are too Faraday depolarized. Similar to our studies of M87*, polarimetric constraints reinforce a preference for GRMHD models with dynamically important magnetic fields. Although the spiral morphology of the polarization pattern is known to constrain the spin and inclination angle, the time-variable rotation measure (RM) of Sgr A* (equivalent to ≈46° ± 12° rotation at 228 GHz) limits its present utility as a constraint. If we attribute the RM to internal Faraday rotation, then the motion of accreting material is inferred to be counterclockwise, contrary to inferences based on historical polarized flares, and no model satisfies all polarimetric and total intensity constraints. On the other hand, if we attribute the mean RM to an external Faraday screen, then the motion of accreting material is inferred to be clockwise, and one model passes all applied total intensity and polarimetric constraints: a model with strong magnetic fields, a spin parameter of 0.94, and an inclination of 150°. We discuss how future 345 GHz and dynamical imaging will mitigate our present uncertainties and provide additional constraints on the black hole and its accretion flow.