What it's ‘sposed to mean: You have woefully misjudged your behaviour and it's completely misaligned with your situation.
How it's used: A subjective authority-stamping command masquerading as a cool, detached objective statement of FACT. It may sound like a dispassionate observation, but make no mistake, if you’re told your behaviour is inappropriate you are being told off - "This is my 'hood, I don't like what you're doing and I'm telling you to stop it": The terrifying doom from on high - Oh my Christ, have I done something... INAPPROPRIATE? It’s not just your actions that are being trashed, it’s your judgement.
But: Who decided what was appropriate here? Are you sure they’re correct? It is a judgement call, after all – are they infallible? Do they have any better handle on the situation than you? Do we all have the same goals here? Are we all on the same agenda? Do we all see all facets and perspectives of this set of circumstances? Because if not, what is “appropriate” or not is very much relative and up for grabs…
I admit there is something delicious about the word though - such a lot of power for such a politely unassuming bunch of syllables. The quieter it's said, the better... *Ahem*. Excuse me, that's (whisper it)… inappropriate.