This phrase came about during the height of ancient Rome when , most likely due to the extreme wealth of the Roman Empire, fully one-half of the Roman populus was unemployed. This was such a problem that, in order to spread the available jobs around, every other day was a declared a state holiday.
This underclass lived purely on handouts of food from the state -- the 'bread' part -- and 'circuses', meaning entertainment; the nobles of Rome as well as Rome herself would hold 'duties', which was a fancy name for lowest common denominator entertainment. This entertainment was usually took the form of combat or death sports, such as Gladiators.
And so, this saying comes from the fact that, at the time, the only thing keeping these huge, unwashed masses from revolting was 'bread and circuses'. It illustrated the fact that a noticable part of the proletariat are willing to accept apalling conditions as long as they have enough to keep themselves occupied and don't have to do much work for it.
This was first 'coined' by Decimus Junius Juvenalis who wrote the full comentary as "The people who have conquered the world have only two interests - bread and circuses!"
So, in modern translation, if would mean 'food and entertainment'. A current, and unbelievably un-PC, version would be "Government Cheese and Monster Truck Rallies".