In Orwell's novel, all citizens of Oceania are monitored by cameras, are fed fabricated news stories by the government, are forced to worship a mythical government leader called Big Brother, are indoctrinated to believe nonsense statements (the mantra "WAR IS PEACE, SLAVERY IS FREEDOM, IGNORANCE IS STRENGTH"), and are subject to torture and execution if they question the order of things.
The word is sometimes used to describe a particularly anti-libertarian government policy, but it is also sometimes used to describe the peculiar, nonsensical thought process behind Oceania's social structure--a thought process in which ideas that are obviously self-contradictory are accepted as true based on the fact that an authority figure is asserting them.
The Bush administration's No Child Left Behind program (which is unfunded and therefore technically leaves children behind) and Clear Skies Initiative (which weakens anti-pollution regulations and therefore technically makes skies less clear) are often cited as examples of Orwellian policies, but so are London's omnipresent surveillance cameras and North Korea's patriotism indoctrination camps.
The best way to understand what does and does not constitute Orwellian policy is to read Nineteen Eighty-Four itself. Secondhand descriptions of Oceania do not do justice to the oppressive, mind-wracking atmosphere described in the novel.