It means it's for the attention of a group of people inside Atlassian who may be interested in certain types of issues, or issues related to specific topics, but are not a distinct group that can be defined by user management.
I think the "muppets" are mostly focussed on the core Confluence stuff, "hobbits" more about Confluence questions and so-on.
I suspect you might be asking because some people use "muppet" as a derogatory term for someone being a bit silly or doing something mildly daft. This is not the case for Atlassian - it really is just a set of people. Personally, I take it as a compliment, because I like the Muppets. (Not sure I should have learned all my cooking skills from the Swedish Chef, or jokes from Fozzy, but hey...)
Nic is essentially right, most of our product engineers are broken up into smaller teams and they usually give themselves some sort of name. The "Muppets" team is one of the teams within the Confluence product team, and the label was probably attached to the issue so that they would look at it (different teams use labels differently in their JIRA projects, so I'm guessing). There's a wide variety of team names within Atlassian, some based on themes, some just random. - Marcin Atlassian Stash (Red Team :) )
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Any other country that celebrates Midsummer holiday (this friday 22 June)?
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