The term hillbilly originated as a perjorative term for people who lived in isolation in the Appalachian mountains of North America. A less demeaning term would be "hill folk". The use of this definition was probably most valid between the western expansion and the 1940's. The advent of the interstate highway system and television brought Appalachian communities into mainstream US culture in the 1950s, 60s., but many communities with relatively traditional lifestyles remain throughout the region.
In modern terms a hillbilly is an individual characterized by being generally unrefined.