This refers to brain damage (in the form of permanent retardation) caused by a fetus being exposed to alcohol via the alcoholism of the mother. This is not to be confused with child abuse, which can also cause retardation and brain damage and be caused by alchoholism, but which involves children, which are alive, rather than fetuses, which are not
fully alive, and thus inferior. Also not to be confused with the similar concepts of "
crack babies" or "meth babies," which are completely unsubstantiated (and widely denounced, by those professionals who study such things) allegations propagated by the Church of Voodoo Pharmacology.
The phrase can be used as an explanation for unusually retarded behavior. See alcohol in the blood
surrogate.