What does IPC mean by a process indicator?

A process indicator is a deviation on the product (not a defect) that does not affect function, fit or reliability. Think of “minor flaws” such as a slight discoloration of the insulation, a solder joint with a small void (pin hole), etc. The product works fine but it does not look so neat. The cause is usually in the tool (wear), machine (setting), but can also be caused by a personal error (wrong action).