It's meaning is Dirty Blood. It is a Slur in the Wizarding world. Common used by pure-blood supremacists such as the malfoys, Blacks and Death Eaters. (obviously there are exceptions such as Andromeda Black which married Ted Tonks who is NOT pureblood. Another common exception is the famous marauder Sirius Black)
Disclaimer: IF YOU DON'T KNOW IT YOU ARE A FUCKING MUGGLE, DON'T EVEN TRY PASSING THE PLATFORM 9 THREE QUARTERS!
Don't you dare use it agains someone you mudblood!
1. A demeaning name for those who are born into muggle families and can use magic. These people tend to be disliked by Slytherins due to Slytherins being pure-blooded and believe that only pure bloods should be able to attend Hogwarts.
2. Tend to be intelligent witches and wizards. e.g. Hermione Granger, Lilly Potter
Draco: You filthy mud-blood!
Hermione: WTF U JUST CALL ME!!!
Draco: A filthy, dirty, bluggered, MUD-BLOOD!
Hermione: Taste magic BITCH!! STUPEFY
Justin Flinchfetchly: Hey Hermione. How'd you do on that test?
Hermione: Dude I totally aced that shit! How'd you do?
Justin: ACED!!
Hermione: Fuck yea you did mud-blood!!
Justin: O hellz yea mud-blood!!
Mudblood is a highly derogatory term for a Muggle-born wizard or witch. It is also a racial slur to black witches and wizards commonly known to muggles as the "N-word". Draco Malfoy is guilty of dropping the "M-word" a bunch of times in the books.
The smug look on Malfoy’s face flickered. ‘No one asked your opinion, you filthy little Mud blood,’ he spat.