1. Sometimes it's an excuse for immature, morally depraved, suburbanite dumbshits to get away with obvious hatred and bigotry. They'll cry "PC" as a means of making YOU look stupid for calling them on their bullshit, when you were completely in the right for doing so.
Ironically enough, when you label them with justifiable terms as "racist", "homophobe" or "bigot", they'll cry, bitch and whine that they're not and cover over it by saying that they're not "racist" and that you're just being "oversensitive", which is actually a form of "political correctness"...the very thing that they hate (totally not hypocritical!).
These are the same people who are under the impression that their freedom of speech rights are being legally taken away by Poltical Correctness, when the reality of the situation is that these people were stupid enough to bow out to FUCKING PEER PRESSURE.
You get what you deserve, assholes. Don't whine about "political correctness" impeding on your freedom of speech, whine about your lack of testicles and how you bowed out to societal pressures like little bitches! THAT is what restricted your freedom of speech.
These people claim that those who whine about "political correctness" are crybabies, but these idiots are no better.
2. Other times it's just over-sensitivity to certain things.
Examples from Definition #1-
Dumbshit: Dude, did you see me curbstomp that nigger?
Intelligent Person: You're a racist piece of shit.
Dumbshit: Dude what's with the political correctness? I'm not racist, you're just "oversensitive".
Intelligent Person: No amount of crying "PC" and calling me "oversensitive" won't save you on this one, you're a racist piece of shit. Deal with it.
Dumbshit: *Cuts himself to crappy Emo music*
Depraved moron: Dude, did you see that gay dude prance around in his pink shirt? He's such a fucking faggot!
Intelligent person: You're a homophobe.
Depraved moron: That's offensive to me!? I'm not a "homophobe" you're just being politically correct!
Intelligent person: ...You worthless hypocrite. *Sprays the douchebag with a flamethrower*
EXAMPLES FROM DEFINITION #2:
Hyper-sensitive person: That person over there has a severe weight deficiency.
Normal Guy: Huh? All I see is some fat dude.
Hyper-sensitive person: Don't say that! It's offensive.
Normal Guy: *Rolls his eyes* You've got to be kidding me.
Normal person: HEY! Merry Christmas!
Hyper sensitive: I think the term you're looking for is "Happy Holidays".
Normal Person: Whatever...call it what you want, I'm getting presents anyway.
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