The concept refers to leverage, meaning you can't borrow the moon (any more).
A given brokerage might have a minimum net capital rule of 40%; that is, if you have $1 million in stocks and bonds in that account, you can borrow up to $600,000. Your minimum net capital would then be $400,000 or 40%. The law exists to avoid that little thing that happened in the 20s with the stock market.