In a Western context, it usually refers to the control that party leaders have over its legislative members. Party discipline tends to be extremely strong in Westminster systems such as Canada or India in which a vote by the legislature against the government will cause the government to collapse. In these situations, it is extremely rare and suicidal for a member to vote against the wishes of their party. Party discipline is much weaker in Congressional systems such as the United States Congress. In these legislatures, it is routine for members to cross party lines.
The term has a somewhat different meaning in Marxist-Leninist political systems such as the People's Republic of China. In this case it refers to administrative sanctions such as fines or expulsion that the Communist Party can impose on its members for actions such as corruption or working against the party.