Generally speaking, "fill flash" refers to using flash to suplement available light. Both the ambient light and the flash contribute to the exposure. This is opposed to using flash as the main or only light source, which is often the case in relatively dark indoor environments.
Fill flash is most often used outdoors to "fill" the shadow areas created by direct sunlight, or to illuminate a shaded subject with a sunny background. Sometimes fill flash can be used indoors, if there is enough ambient light to contribute to the exposure at reasonable shutter speeds.
Indoor fill flash can be direct or bounced. Outdoors, direct flash is usually the only viable option.
The effects of fill flash should be subtle, such that a layman looking at the image would not realize flash was used at all. If you're getting washed-out subjects when using fill flash, dialing in some negative FEC is usually the appropriate remedy.