It's a basic economics term to describe people who have fallen out of the core statistics of the unemployment rate after long-term unemployment and are therefore classified as "discouraged". In some cases, this may derive from a variety of factors including a shortage of jobs in their locality or line of work; a lack of necessary skills, training and experience or chronic illness or disability. It is also possible that a "discouraged worker" has found a source of income in the underground economy substantial enough to sustain their desired lifestyle.
As a general practice, discouraged workers, who are marginally attached to the labor force, on the margins of the labor force or as part of hidden unemployment, are not considered a part of the labor force, and are thus not counted in most official unemployment rates - which influences the appearance and interpretation of unemployment statistics.
Although some countries offer alternative measures of the unemployment rate, the primary existence of the category of "discouraged workers" is to account for the likelihood that the employment status of these people could not be altered by a government change of policy or the upswing of the economy. In some cases, these people (including some housewives who may have left the labor force after getting married and having children) do not have a job because they do not need a job. It would skew the statistics to include them as being unemployed.