In modern era - It has been observed that, most of the western countries has mindset that, all the 3rd world countries are poor and underdeveloped ( Mostly in Asia - Africa).
China belongs to second world but they also have lot of poverty; western countries are unaware of that. In fact, many countries in Asia are developed or developing and their economy is much higher that European countries but still they think 3rd world countries are much poor.
What do you think about this ?
It actually refers to as what you stated, the least develiped countries. These countries were going to be developed. It is like a low class people. I do not know why they catrgorize it. Maybe on the economy of one's country. Our country is one of the third world country. But thanks to our president, I believe we will become the richest country in Asia once again.