I think the Wikipedia article makes pretty clear the non-specificity and controversy of the term.

I have distant relatives (confirmed through Y-DNA testing) who have documentation of ancestors who were called Melungeon in some documents, but do not know what that really means genealogically. They assume that means both African-American and Native American ancestry, in addition to Welch ancestry but do not know. There is strong circumstantial evidence of Cherokee ancestry among all of the family branches included in our group of DNA matches, (among those who have done genealogical research, tracking scarce birth, death, land transfer, Will, revolutionary war pension applications and land grants) but the Melungeon designation for the particular branch of the family was documented before any of the branches moved into the southern Appalachians. The genealogical paper trail going back to the early 1700's is incomplete and hard to follow for the White males, and nearly non-existent for non-White males and for females of any race or ethnicity. In addition, it is much easier to trace male DNA lines than it is female DNA lines.


So, Melungeon appears to be a very non-specific term with respect to ethnicity, and objectively simply implies mixed ancestry that includes Caucasian and non-Caucasian ancestors. It apparently did not carry the negative, racially based loss of social status and rights of the those later, or in different regions, designated "mulatto," or "half-breed." I'd be very curious to understand the sociology and historical anthropology around that.