A term used for defining a person of poor or no wealth. One who is on welfare, a skank ass turd burglar who lives off people who make a living.
It can also be used to degrade your friend after he's made a dumbass of himself, and it just sounds funny to call someone that, regardless of their money status.
Jeeves: Oh, dammit! Tom, what the fuck happened to your part of the rent??
Tom: Sorry man, I lost my job a couple weeks back.
Jeeves: You fuckin' foodstamp! You are worthless, stupid skankface! I ought to face your mom and have her give me a blow job.
Tom: That's cool dude, she's dead.
Jeeves: Shut up Tom, you are a foodstamp, foodstamps don't know anything.