They’re referring to beer that is limited to 3.2% alcohol by volume. Historically (and even still in many parts of the U.S.), you had to go to a dedicated liquor store to buy beer or spirits that are stronger. Beer that is limited to 3.2% can be sold at convenience stores and often at normal food shops. Due to its low alcohol content, it’s often considered garbage beer, “yard beer,” or American beer.

It’s often easier for underaged folks to buy this kind of beer, since these shops do not always card their clientele, whereas a liquor store will usually have a better culture around checking ID’s.

Also, just because it’s on rotation in my playlists, Adam Carroll’s Oklahoma Gypsy Shuffler makes reference to 3.2 beer.