It is most commonly used to distinguish if someone still goes to Mass every Sunday and Holy Days of Obligation.
If someone is going to Mass every week, they probably still consider themselves to be “Catholic”, even if there are other aspects of the faith they reject (birth control, extra-marital sex, etc.).
Non-practicing can be someone who still considers themself to be “Catholic” from a cultural or family viewpoint. They may have been raised in the faith, for example. But they don’t bother with weekly Mass or any other aspects of the faith. There are “non-practicing Catholics” who still get worked up over wanting to be married in a Catholic ceremony simply because of familial or traditional reasons, for example, even though they haven’t seen the inside of a Church since confirmation.