Something that started out as a sort of moral common sense - actually not a bad idea, eg. saying 'black person' instead of 'god-damn cotton-pickin' nigger'.
However, the whole thing got utterly out of hand in the early 90s to the point where a lot of people will say 'Afro-Carribean' or 'Afro-American' because they think it's racist to say 'black'! It gets even more ridiculous when you consider that in some parts people think it's offensive to 'blackboard' or 'black coffee'.
What began as a force for good (considering the number of people who really are racist, sexist and homophobic) has since become a laughing stock beacause of the ridiculous extremes to which certain neurotic ultra-liberals took it - cf. a person being 'vertically challenged' rather than short. This has actually undone a lot of progress made in changing bigoted attitudes (as bigot can claim any offence taken at their views is 'political correctness gone mad), whilst making people feel guilty for enjoying anything but the blandest, most anaemic humour for fear of being 'offensive'. I mean, seriously, what's funnier out of 'Friends' and 'South Park'? (Or 'The League of Gentlemen' for the benefit of any Brits out there?)
At the same time as straight white able-bodied men are going out of their way to talk about 'ethnic people' (who ISN'T ethnic!?) and those of 'different sexual orientation', there are blacks calling themselves niggas (which has been going on for years), gays calling themselves (and eachother!) poof, queens and queers, and so on - the real way to neutralize a term used as as an insult is for those to whom it was applied to use it themselves.
AT its worst, political correctness is nothing different form Orwell's Newspeak
- an attempt to change the way people think by forcibly changing the way they speak. So let's have a backlash against the nannying, interefering, cotton-wool Stalinism 'ploitical correctness' has become - not to placate bigots, but to speak the truth and enjoy outrageous humour like we're meant to. Remember, the next time someone says they don't like Harry Potter because Hermione is a stereotypically sensitive girl, the relevant word to call them is 'cunt'.
See also liberal guilt
b.t.w. a great many stereotypes exist because they're essentially TRUE.
Tory Politician: "The over-reaction to that joke I told about the bloody nog-nogs is just another example of political correctness gone mad!"
Limp-wristed idiot: "I'm not sure I feel comfortable with your use of the word 'woman', and the assumption of an inflexible gender binary that goes with it..."