What is "squatter sovereignty"

Squatter \Squat"ter\ (-t[~e]r), n.

1. One who squats; specifically, one who settles unlawfully upon land without a title. In the United States and Australia the term is sometimes applied also to a person who settles lawfully upon government land under legal permission and restrictions, before acquiring title.

   In such a tract, squatters and trespassers were tolerated to an extent now unknown.
   --Macaulay.

2. (Zo["o]l.) See Squat snipe, under Squat.

   Squatter sovereignty, the right claimed by the squatters, or actual residents, of a Territory of the United States to make their own laws. [Local, U.S.]
   --Bartlett.