an insulting term from the Wizarding World of Harry Potter (created by JK Rowling). The term itself means, dirty blood. The insult is directed towards witches or wizards who are Muggle-born, someone with non-magic parents. This term is usually used by haughty pure-bloods, witches or wizards who are of magical descent and consider themselves to be higher up in rank. Such as the Malfoy family. The term Muggle-born is very much preferred to the term 'Mudblood.' Throughout the course of the books discrimination against Muggle-borns or 'Mudbloods" intensifies.
Hermione: Shut up Malfoy!
Draco: How dare you talk to me, filthy little Mudblood.