I understand it as just meaning a year that is harder to find for that coin, not that the year is especially significant to the country it was minted in. For instance, a key date might be a perfectly mundane year for that country, but one that happened to have a low mintage.
I do think it is over-used, especially online. A lot of coins that some dealers would just sell as better years get bumped up to key dates kind of arbitrarily. In my speaking to other collectors, some are more old-school and still think that they should only use 'key date' on the rarest years for that coin, some peop