Originally a Buddhist term that is exemplified in the Western world by the phrase "what goes around comes around". The theory goes that if a person contributes and does Good Things s/he will receive Good Things in return, and vice versa. Karma can thus be either good or bad.
It is also a loose term for active members of a community whose work does not need to be thoroughly checked at inception. For instance, Linus Torvalds does not check every addition fellow Linux developer Alan Cox makes to the Linux kernel as he is well aware Alan is more than competent and shares Linus' goals. Alan has developed a good standing over time; as far as Linux development goes, he has good Karma.