Pocho means americanized Mexican, or Mexican who has lost their culture. (Which largely refers to losing the Spanish.)It is a derogatory term can be someone who's trying to "act white" but it has been largely embraced by Chicanos with a sense of defeatist humor - We're pochos, y que? - so that it's actually becoming more playful than bitter. Kind of like, among blacks, "Whas up Nigga".
The tension over pocho/non-pocho can trace back to Mexican history and La Malinche
who was a traitor to the indigenous Aztecs and birthed the first mestizo - hence the Mexican insult Hijo de La Chingada
. Mexican philosopher Octavio Paz wrote extensively on this theme.
A Mexican sees a Chicano stuttering out his Spanish and thinks to himself - pocho - what an embarrassment.
There is a website called pocho.com that's dedicated to aserbic Chicano humor.