#2
It can refer to a number of things. Most commonly probably being a triad with a 1 b3 and b5. This is a diminished triad (ex. C Eb Gb). There are also diminished and half-diminished 7th chords. A half-diminished 7th chord contains a 1 b3 b5 and b7 (ex. C Eb Gb Bb). A fully diminished 7th chord contains a 1 b3 b5 and bb7 (ex. C Eb Gb Bbb).