Usually used to describe a black person in a derogatory manner. Between black people, it can be an endearing word that black people use among eachother. When a white or asian or other race calls a black person nigger, it is considered taboo and very racist.
Something or someone that is considered slow. This can be slow-minded or slow-moving. It is also something that is used as a slang term when describing a person or a thing that is considered silly or foolish.
My teacher told me that I need to do my homework on Saturday night, that is so retarded!
Michael is handicapped and it makes him a little slow, but if you call him retarded he'll run after you with a giant stick and make you take it back!