This term appeared at about the time my kids were in their mid teens. My understanding was that there were a number of small record companies set up and they recorded bands whose sound and style were different from that the big record labels were used to and did not think would sell. Of course the small labels proved them wrong - the bands did sell and produced a sound that became "Indie" as an shortening of "Independant Label". As to the characteristics of the sound I was never really clear.