Originating from the Harry Potter books by JK Rowlings.
1)A non magical person
2)A 'normal' person
3) A person not involved or aware of your social circle's activities
Ex 1 & 2) Harry Potter's uncle, aunt, and cousin have no connections to the magical world or magical abilities, and are referred to as muggles.
3) A group of geocachers, role-players, harry potter fans speaking of a non-roleplayer/geocacher/harry potter fan etc... "I tried to explain it to her, but she was such a muggle. She didn't get it." or "Avoid the muggles, they're all over the park this afternoon."