It usually means severe hardships. I would think physical handicaps or financial hardships would fall under this line.
I claimed myself disadvantaged. Briefly, cause I don't have much time, my life went something like this:
My mother is a schizophrenic and my father had a stilll experimental liver transplant and a boatload of other procedures when I was growing up. Both spent extended periods in the hospital. Because of this, I bounced from family member to family member in the city. My family was lower class to begin with, and even when I could live with my parents we really had no money. We lived on government assistance, which is something AMCAS asks about in the disadvantaged section. My public city schools were a joke, and the state actually closed down my high school after I dropped out.
Some told me not to apply as disadvantaged. I don't think putting that onto AMCAS really helped me, though my family background probably helped me at interviews because I had plenty to talk about.