In Australian history, the term refers to early farmers who occupied huge tracts of largely undeveloped land on which they ran large numbers of sheep and cattle. Initially often having no legal rights to the land, they gained its usage by being the first (and often the only) Europeans in the area. It is known that many fought battles (though with the disparity in weapons technology they were usually more like massacres) with the local Aboriginal communities in the areas they occupied, though such battles were rarely investigated and modern historians resort to much guesswork in estimating the numbers of Aborigines killed in this fashion.
Whilst life was initially tough for the squatters, with their huge landholdings many of them became very wealthy and were often described as the "squattocracy". The descendants of these squatters often still own significant tracts of land in rural Australia, though most of the larger holdings have been broken up, or, in more isolated areas, have been sold to corporate interests.
Their iron grip on Australia's agricultural land was broken up in the 1860s with the passing of "selection acts" that allowed ex-miners from the 1850s gold rush to claim areas of farmland at no cost. Whilst squatters tried tactics legal and illegal to discourage "the selectors" (for instance, taking out selections of their own which covered vital land such as watercourses) eventually wider settlement took place and smaller farms (though still huge by European and even U.S. standards) became the norm in more fertile parts of Australia.
The power of the squatters, including their affinity with the police, is alluded to in Waltzing Matilda, Australia's archetypal folksong.