A mudblood is a child with one parent who is white and another parent who is black (or sometimes just non-white). The pure white blood has been "dirtied" by the black blood, hence the term "mudblood". The mudblood's white parent is most often refered to as a "mudshark".
Bob: WTF. You see how many mudbloods that white chick has. Why would she ever want such a thing for her kids; taking away their pure white blood and all.
George: Idk, maybe she wants to make her white father mad or maybe she's one of those white chicks that thinks she's black just because she lives within the city limits.