I've seen this term a few times...what exactly does it mean?

 

orange peel is a term to describe how the paint looks. Cars stock has 7 layers of paint and 4 layers of clearcoat. in between every layer you're suppose to wet sand. (some places don't because they get lazy). Anyway, when it's not wet sanded properly the finished paint job looks like orange peel, literally.
On the other hand Orange peel isn't always a bad thing. Usually on trucks you'll see orange peel on the bottom half of the truck so the paint won't be damaged. Orange peel serves as a barrier to rock chips, etc. You don't want orange peel on the upper surface of your car.