They're talking about liquid latex. It's a naturally occuring form of rubber kept in a liquid state by being combined with ammonia. There are different grades of liquid latex. Mold making latex has added solids so that it builds up quicker. Slip latex is poured into a mold, swirled around, and the excess poured back out to make masks, etc. Then there are are grades of latex that are used on top of such things as styrofoam wig heads to make skin and added features. Any grade of latex may be thinned with water to use in this manner. Many of us buy our latex online at http://cementex.com/, and I buy my favorite mold making latex from Michael's crafts stores.
Liquid latex makes for great scar effects.
I did some f/x for a buddies kung-fu movie back in high school, and after going through a candy glass window I made, I got to cover my face and arms in latex.