This phrase describes a genre of film with particular interest in finding humor in the recreational use of drugs, but particularly marijuana (pot, weed, hash, ganja, et cetera ad nauseum). Probably originating with the seminal work of Cheech and Chong, this genre has recently experienced something of a revival, perhaps owing to the perceived increase in mainstream acceptance of marijuana. (Ironically, if marijuana ever were actually considered mainstream, the appeal of these films would be greatly reduced.)
Examples of this genre include Up in Smoke, Friday, Dude, Where's My Car?, and Half Baked. I would exclude serious drug films like Traffic and Blow from this category, but this is subject to debate.
The word "drugsploitation" is, for those of you a little too stoned to realize, a contraction of "drugs" and "exploitation." This contraction makes reference to the fact that these films are exploiting a popular cultural element in an attempt to be appealing, despite their lack of redeeming import. This isn't to say that these films aren't entertaining, just that their entertainment value relies on the humor inherent in drugs; much in the same way that Jurassic Park relies on the entertainment value inherent in dinosaurs.
Drugsplotation as a genre can be considered parallel to genres such as blacksploitation and teensplotation (not to imply that blacks and teens are cultural phenomena).