It's a Dark Elf profanity for "not native to [Dark Elf home territory]." Apparently extremely offensive in-universe.
...Once I get into a game enough, the wiki walks begin in earnest. Prior to finding that out, that was about the reaction I had when I first heard it said. Almost sounds like a random vocalization without context.
WITH context, well. . .I'm a lizard person. My player species sacked the majority of the Dark Elf country after centuries of being kidnapped and used as slaves by them. Needless to say, the term applies. "Fetcher" arguably comes off even worse to me with that in mind despite being a lesser term since it outright references slavery, and folks in the Dark Elf DLC region sling that around too.
The Dark Elves seem to mostly have taken the L considering they honestly come off as the nicest race in Skyrim overall, but apparently not in terms of slurs.