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1.
Means the group came from the west side of Long Island, ie Brooklyn.

The term can be extended to mean Philly as west coast, NYC as east coast.

Often the term is incorrectly used to describe music from California. This is wrong because that music can scarcely be called hiphop.
Dude: Beastie Boys are west coast hiphop

Man: No they're not, they're from New York!

Dude: They're from Brooklyn, and that's as far west as you want to go.
by TreeWeezel April 26, 2011