Although it literally means "from the East" as Webster 1913 so helpfully pointed out, it is generally not a good idea to refer to people in this manner. Because it conjures up bad memories of times past, it is generally considered rude to refer to a Chinese, Japanese, Korean, Vietnamese, Thai, or otherwise East Asian person by the term "oriental."
Referring to rugs or other inanimate objects using this adjective is still considered perfectly Kosher.