A Potentially Unwanted Program,
is a program that does
something *unwanted* such as install a million toolbars (AVG I'm looking at you), or sells their browsing data to a company.
This differs from normal
spyware or adware in that the user agreed to it in the EULA or privacy policy that they didn't read before installing, therefore making it somewhat
legal.
Similar to PUPs are grayware.