It’s a term used to mean a wallet that you use on a device that only has the public key. So you can view your transactions, but you can’t send bitcoin without a signer.

Traditionally phones didn’t have good integration with hardware wallets, so they really were “watch only”. But now that there’s hww and phone apps that work well together, the term doesn’t make as much sense. Because can create the send txn, on your phone, sign using hww and send from your phone.