Aside from independent meaning you belong to a lesser known music label doesn’t the term indie also have to do with if you produce the music yourself? I’m just trying to clear up my ignorance towards what indie means.
The first answerer kinda got it, but his was pretty "copy and paste from Wikipedia."
I don’t know what you mean by "produce," as in the music world, this can mean many things. I’m going to assume you don’t mean the technical/business side of producing (ie: sitting in the studio, producing sounds, playing with plug-ins) but rather the artistic side of "producing," meaning the production of something.
So yes, most "indie" bands, whether on a major label or not, write their own music and lyrics. Whether they are talented musicians is totally beside the point.
Also, indie labels aren’t generally "lesser known;" they just operate outside of the major corporate system — meaning theydon’t belong to a larger company, such as Universal, which is owned by NBC, which is, in turn, owned by GE. In fact, I would argue that in the past 20 years or so, indie labels have become more famous than their major counterparts. (See, for example, Sub Pop, Merge or Matador. Sub Pop is pretty much a household name by now; they signed Nirvana.)
However — and this is what really gets me — is that "indie" has become less about the business ideals and more about an aesthetic. You see 13 year-old girls online asking how to "dress indie" (WTF?) and bands saying they want to sound "indie." Indie is a lifestyle, but should never be regarded as a physical presence. This is why I’m more supportive of the DIY movement (IE: The Smell) because it’s more about artistic practice than dressing or sounding a certain way. Nowadays, you’ll have major label bands totally ripping off the "college rock" sound and look by throwing a bunch of shaggy-haired guys onstage in plaid shirts, giving them some guitars and having them play really emotive, expressive songs. This is SO NOT INDIE.
So to summarize: Indie is a creative mindset and not a genre. (Despite what people try to tell you and despite what major publications try to say.)
Examples of indie bands past and present:
Pavement (one of the flagship indie groups of the 90s)
The Arcade Fire (I’d still call them ‘indie,’ despite their widespread acclaim)
The Dirty Projectors (although they just got ‘big,’ they’ve been around for a while and are still pretty small)