When the term was originally coined in the 1960s, it referred to a number of small-caliber, poorly-made, imported revolvers; but today it is simply slang for "cheap handgun".
Bill Clinton tried to legally sue these companies out of business because he could not get legislation passed to put the companies out of business. This was controversial because the lawsuits were all dismissed and they appeared to be pursued for the sole purpose of forcing the company to spend money for legal defense.