It's a really weird umbrella term. I've noticed that albums I import into my library that are punk, gothic, synth, experimental, grunge, metal(ish) and sometimes "indie", come up as "alternative" in the genre column. My interpretation is that "alternative" refers to rock music (for the most part) that most "casual" listeners (aka the popular/majority) wouldn't be into/wouldn't be looking for on the radio (SO, anything that isn't pop rock or "classic" rock). I guess.
the radio station in my town that plays Nickelback, Creed, Korn, Metallica, and other garbage has the tagline: "X103: Indy's New Rock Alternative". So it's a bullshit genre if someone actually considers Nickelback to be "alternative". Besides the public radio stations, my town has garbage radio to begin with.