I had the exact same question when I heard the term. Cargo cult code (Jargon File entry) is WRONG (doesn't work/security risk/poor practice) code that is passed along anyways. A bad meme.

A super search for "Cargo Cult" will give you some examples of the term being used, usually in reply to some code in that category. Merlyn is particularly vigorous in down-voting this code.

Other "classic" examples are A lot of Matt Wright's perl CGI code, and the "Pragma: no-cache" myth.