From CryptoWiki

Term that got introduced due to Layer 2s. Layer 2s are not built with consensus mechanisms like L1s do, they, if done well, should inherit their security from the L1 instead of their own consensus mechanism. This is not the end of the matter though as tx on a L2 still need to be ordered into L2 blocks, where on a L1 miners or stakers do this, on a L2 this is generally done by what is called a Sequencer. As of 6-2024, almost all L2s use centralized sequencers (owned by their Foundation or core team), these are able to capture MEV and censor tx, or halt ordering tx. They can't steal user funds, however, almost all L2s use admin keys on the smart contract of their L2 on the L1, which in almost all cases has the ability to do whatever it wants with user funds within the L2 contract.