For me it means releasing tons of new entries and expansions from a single franchise to squeeze every penny out of it. There's often little to no effort put into these titles.
Milking a franchise is bad as it leads to stagnation and ultimately destroys the brand or atleast hurts it.
Guitar Hero is a perfect example. I'd say Sonic has been there.
Saying Halo is being milked is just plain wrong. You have Halo 1-3, Reach, ODST (or something like that). You also have Wars but that game is fundamentaly different from the main games. So, you have six games, two for Xbox and four (soon to be five, or six if you count the remake) for Xbox 360 and that isn't much when you consider the importance of Halo as a system selling brand and how many entries other series has gotten this gen.
I don't consider using a brand in numerous games milking if the quality is there and the games are split between several franchises. So I wouldn't say that Final Fantasy is overmilked as the games are split between the mainline games, Crystal Chronicles, Tower defence games etc. and most games are more or less solid. Same goes for Mario which is split between Super Mario Bros., 3D Mario, Mario Kart, Paper Mario, etc. Mario Party is the one that comes closest to being milked though nine entries split across 3 consoles isn't that much when you think about it.
