There are four common usages of this term:
(stuff about making metal parts moved to SelfAssembly)
If the compiler is self-hosting, then developers frequently use the compiler to compile itself, and repeat the process several times. The idea is that a buggy compiler will produce steadily worse compilers for the first several generations. -- EricKidd? at XpForOptimizingCompilers
See also SelfReplication, SelfPrintingProgram, SelfAssembly