It's when you make your own latte or whatnot by buying espresso and using the free milk.
It's also the kind of thing that can get your dick punched.
I was following that controversy. I understand the shop's concerns about being ripped off, but there is no significant "quality" difference that would result from using ice with espresso rather than hot water (as for an americano), that wouldn't likewise be present for any cold drink. And if they really cared they'd make actual iced espresso, which is a totally different process that doesn't use hot water at any point.
The solution to ghetto lattes is to charge by cup size, and to kick people the f out if they insist on trying to rip you off, instead of inventing dumb coffee rules and then quite transparently lying about it.
When I worked as a barista, I would make whatever people wanted. I might tell them it wouldn't work (as in adding real fruit syrup to milk (curdles)) or that it would taste bad and be overpriced (as in making a large cappuccino (pointless)) but I would make it if they wanted it. Because who cares? I would also tell people, if asked, that I thought the only worthwhile drinks were tea, hot chocolate, espresso, and coffee, and that they'd be better off going to an ice cream shop if they wanted milkshakes. I was a dick about correct terminology, though.
When the dude linked to the video clip from 5 Easy Pieces, he won the argument.
