It was a subreddit where redditors would post pictures of underage girls. The images weren't outright pornographic, they were images some of the members took of unsuspecting girls in public or other locations(I remember there was a teacher posting pictures of his students) or images the girls posted themselves on various social media. Some were suggestive some weren't but all of them were leered over and discussed by creeps with language that should never used towards minors.

At some point the subreddit came into the attention of Anderson Cooper which run a segment on CNN about it. Even then Reddit refused to ban the subreddit citing "free speech". Eventually one of the people on the subreddit posted a picture of a minor and said he had naked pictures of her which created a feeding frenzy of creeps asking him for those pictures. This finally made Reddit ban the subreddit.

The guy that created the subreddit, Violentacrez, was also the "victim" of an expose by Gawker who found out his real life identity. Reddit tried protecting him by banning links to Gawker when the article came out. Before all that Reddit gave him an award and various redditors voted him as the best moderator or some shit like that. Besides /r/jailbait he was running a lot of other questionable subreddits.

I'm not saying I agree with it, but this is the actual meaning of the word:

Not to defend it but people have a bit of selective bias here as it was not "very young girls" but <18. Still nasty but it was not out right full pedo shit and more geared to cringe teen culture at the time of "I'm 18 but this 17 year old is jail bait". Then the subreddit became a big free speech topic and people straight up started posting young teens to really push the topic which proved reddit's free speech stance wrong and they banned the subreddit.