It means only one thing these days, and that's specifically 'heroin addict on the needle'. The definition originally was a bit more loose in that it was applied to compulsive users of opiates of any type, but even then it implied 'injecting morphine user' more than anything else. There's a bit of an argument about the derivation ; might be from 'junk' as a generic slang term for illegal drug, or the fact that many users back in the day scoured junkyards for re-saleable parts to finance their habit.
Personally I've never minded the term. I know people use it in a derogatory sense, but I used it for myself and so did everyone of the other users I hung out with. In a way I even took pride in it.
Also why sugarcoat. I have an aversion to needless euphemisms. Picking a 'nicer-sounding' word for something doesn't make prejudices go away, it just makes shit sound ridiculous. We don't have retarded people anymore, they have 'special needs' instead. Nobody is handicapped, they're merely 'differently abled'. etc like give me a break. You can call me by some nonsense acronym like PWUD, that doesn't change the fact I shot heroin into my veins several times a day.
I WAS a damn junkie ; I own that.