Anyone of Middle Eastern, Indian/Pakistani origin. Generally refers to those who are arrogant and are a disgrace to their religion and native country (Terrorists, Extremists, Corner Shop owners who charge the earth for everything).
-I need some cigarettes
-Oh, the Bud Bud shop is open, go there.
-I'm going to play Call of Duty 4 and shoot some Bud Buds (refering to the Terrorists in the game, or "OpFor").