I heard this term for the first time last week in Boston. I understood "sites that use two or more external sources to provide a new service". The first reference was Mappr, which uses Google Maps and Flickr APIs to geographically organize Flickr photos. But mashups are more than this, they have a huge fun potencial, as stated by this Zdnet's post.

Update: While thinking on the subject, I decided to make my first movie mashup: five pixar movies and a soundtrack, and you have it, an all new video clip for Birds of Prey by Fat Boy Slim. While you wait for the download (6MB for a 6m49s clip) you can take a look at the Web 2.0 Mashup Matrix.