I think it means whatever your company has decided it means. It would also depend on what sort of company you are and what sort of "customers" you have.
In our company, I guess this would be what we term "dogfood testing" (as in eat your own dogfood). We get everyone in the company to use our product to go about their daily business. (We actually also ask that they take some time out to also ad hoc test the product). We do this after the product has gone beta (ie all features are in the product) but before it's released.
Again, it really depends on the type of company and the type of customers you serve.
Typically it means that you are using your company's staff as beta program participants. Though in some cases, it means that you are conducting beta test 'in-house'. Meaning bringing people from the outside to your office, and have them run through series of usability tests or sometimes just 'managing' the beta/usability programs within.
The first is absolutely useless. Everyone knows that 'politics' exists and almost everyone in a crappy job market wants to mitigate the risk of potentially upsetting someone powerful in another department and impacting their livelyhood. It's better to bring someone from a steet, pay them a nominal fee (or give the final product, given they participated in the testing). That way, the risk of political bias is minimized.
NOTE: Don't let CEO/CTO/VP/Director/Manager/Developer's spouse, family, children, long lost relative, pets or what ever participate. Again, you may get biased opinion that will skew the results.
Plummi and igglue have pretty much hit it I think but, I have to disagree with igglue on the fact that letting employees test the software is a wash. We give the pre-release to our technical support folk to catch what we missed. No one can think more like the end user than them. They always remember that phone call where the customer is trying to do something no one even thought of in design or testing.
What would hurt the company more, letting the bugs get out or not reporting a found issue for fear of losing your job? Me thinks I would be in even bigger trouble after it got out and they came to me and asked "How did you not see that?". At that point I don't think it would matter that QA, Dev and Product Management had missed it as well, but then that is my opinion.