The terminology specific to a trade, profession, or group. Thank you, dictionary.com. You have enabled me once again by relieving me from leaning over and grabbing my real one.
In situations like this, jargon is annoying and almost - almost - warrants a facepunch. Part of me thinks that the person you're talking to is probably so wrapped up in your conversation that they don't realize that they're using unfamiliar terms. The other part of me thinks they're doing it on purpose.
In writing, jargon can be necessary, but it has to be done correctly. If jargon is used, it can't lose the reader; the author needs to make sure that the meaning can be deciphered by anyone who picks up their work. That's not to say that there needs to be a glossary at the end of your medical novel (not that that's a terrible idea), but definitely make what you mean understandable so it doesn't take the reader or viewer out of the story. Make them think, but not too much.
Example: "His BP is a normal 120/80," the nurse said to Dr. McHotstuff as she removed the blood pressure cuff from the patient's arm. No, I'm not sure how accurate this encounter would be because I'm not a doctor (but I have watched a lot of Grey's Anatomy and House, so that should count for something). Though "BP" is considered common jargon, to make the meaning of what the nurse said clear to you lovely readers, I added the bit about what she was doing...removing the blood pressure cuff. Do most people know what BP means? Yeah, probably. Just like most CSI fans know that "GSW" means "gun shot wound," "subdural hematoma" means something about bleeding in the brain, and that when Horatio Caine puts his sunglasses on that usually means he's going to say something that will make me roll my eyes. Okay, that last one isn't jargon, but for the others, their meanings can be inferred from what the characters are doing (watching an autopsy and poking around the dead body, conversations with the other characters, looking at x-rays) even though most of us aren't trained to know the terms.
Jargon can add to the realism for the reader (or viewer). Even though I know Hugh Laurie isn't really the brilliant-but-flawed Dr. Gregory House, his dialogue and awesome acting skills convince me. However, if he was to say something about "that thing on her leg" or "that gross stuff coming out of that guy," when he's being serious and not in one of the character's moments of biting snarkasm, the show would not be as convincing. In fact, I'd be wondering what the hell Dr. Cuddy was thinking in hiring that guy.
In writing, Michael Crichton always put a lot of effort, time, and research into writing his novels, and was known for using lots of jargon. Jurassic Park wouldn't have been as intense if the characters didn't use proper terms relating to biology and cloning, and the pirates in Pirate Latitudes wouldn't have been convincing if they didn't know anything relating to sailing. Hell, even Capt. Jack Sparrow knew nautical terms.
Creating your own world in your fiction? Make up your own jargon to use! What do you think George Lucas and Gene Roddenberry did? And they created two little somethings called Star Wars and Star Trek. Lightsabers and warp drives, anyone?
So don't shy away from using jargon, but use it as it's meant to be used. The best way to get a handle on it is to talk to real people who use it. Doctors, lawyers, truckers, sailors, IT professionals, military. You don't want your characters to sound ridiculous, in turn making you sound ridiculous. Google is also helpful, and you can find glossaries of different terms by profession if you look.
In short, jargon can help make your awesome story even awesomer, but use it realistically or you'll look like an idiot.