People always use this term wrong.
Specifically, the definition is: "pervasive pattern of negativistic attitudes and passive resistance to demands for adequate performance in social and occupational situations"
Example: Letting the air out of someone's tires. This is an aggressive act. It's not passive aggressive, because it's not passive. It is sneaky and cowardly, which has nothing to do with being passive.
Example: Your manager is on the hook to have feature X ready on Monday. He has annoyed you by buying the wrong brand of coffee, so you read HN all day on Friday and avoid working on the feature. On Monday your manager looks bad for not delivering the feature on time. This is passive aggressive, because it was via withholding of sufficient effort that you managed to harm someone.
Why it does matter, especially if everyone seems to get it wrong: https://www.mtholyoke.edu/acad/intrel/orwell46.htm