OEM stands for Original Equipment Manufacturer.
Basically OEM software/hardware is intended to be sold with systems, not as standalone retail packages.
What should happen: The software/hardware is sold in bulk to an OEM at substantial discount without the packaging/manuals/goodies a retail consumer expects.
What actually happens: The software/hardware ends up being sold retail at a substantial discount. You get the stuff without the packaging, manuals and extras that you don't need but have to pay for when you usually buy retail.
Basically, if you buy OEM software you just get the CD and nothing more...
I like OEM stuff. That's my view, I know others disagree...