Please define

I read this term a lot here on the Gon, as well as in equipment reviews. When I think about this term, one of two possiblities comes to mind: The sound is so bad that it eventually causes ears to hurt or be fatigued?. Or, the sound lulls the listener to sleep in stead of keeping him awake by drawing him into the beautiful, dynamic music....

So, which one is it, or am I completely off base?? Help
What term are you speaking of?
If you're referring to listener fatigue, it's a term I personally associate with a very forward, in-your-face type of sound. When the soundstage is pushed aggressively and artificially toward me, I lose all sense of background, sublety, microdynamics, and so on. Over time I find that such sonics become "fatiguing" to listen to.

Your mileage may vary, reasonable minds may differ, your gear and your ear, etc.
I find it really depends to a great extent on the music you are playing and the mood you are in. Sometimes I want it face forward sometimes I just want it sweet. I also find that having a couple of different systems help!! Volume by the way is critical. Your hearing, so I am told, changes with respect to which frequencies you hear best at different volumes. Most fatigue is heard in the treble or upper mids at loud volume.
Oops!, Sorry, yes, the term is "listener fatigue."
I associate listener fatigue with distortion. It's obvious that if you're listening to a system that is relatively harsh, edgy or shrill, your ears soon will find it unpleasant. But frequency imbalances that are not nearly as noticeable in the short term can produce fatigue after a while. There may be shouty, boomy, or ringing parts of the musical spectrum that aren't really obvious but just get to you after a while. The louder you listen, the quicker these shortcomings get to you. The room, as well as the equipment, can produce listening fatigue.
I get that when my boss opens his mouth.
Jayboard hit the nail on the head, in my opinion. This problem was apparent in my own system prior to the most recent upgrade. I discovered that it IS possible to have a highly accurate and resolving system that is still smooth and sweet without being veiled or syrupy, but finding the right speakers and components to accomplish such a thing was not a particularly easy task.

Often the systems being presented as "high end" sound either etched or veiled, and neither is good.
I think it's something more subtle. A lot of people with both digital and analog (lp) front ends find that their listening sessions tend to be longer with records than with CDs and ascribe this to 'fatiguing sound'. It's definitely the case for me...