Many
Protestant sects of
Christianity use this term to mean something
milder than the
Jehovah's Witnessess mean. As far as I can tell, it largely means that the
person disfellowshipped is not a
member of the
church any more and isn't particularly
invited to come back unless
he/she reforms.
Related ideas are excommunication, which is practiced by the Catholics; shunning, which (IIRC) is practiced by the Amish; and Suppressive Person declaration, which is practiced by the Scientologists.