Ask CJ: what does "ABD" mean?

From the inbox, a good question:

Your latest Ivory Filter Flask post made me wonder: when "ABDs are encouraged to apply", does that imply that ABDs are in the process of finishing up...or, like in humanities, it's an alternate way out?  

I suspect that "ABDs are encouraged to apply" means "Just because you're still technically a graduate student and you haven't defended, you can still apply" and not "we don't mind if you don't finish your Ph.D. thesis and defend." 

That said, I've never sat on a small college faculty search committee, so I have no idea. Readers, what say you?