I'm glad you brought this up! The matchy-matchy label is often used on another fashion blog I read sometimes to criticize an outfit, but I'm not always clear on exactly what it means and why it's bad.
Today, for example, I'm wearing all blue stuff: blue jeans, blue and white striped woven shirt, blue cardigan with an argyle pattern, blue and grey striped socks (not that they are particularly visible), and red flats. Originally I planned to go out shopping, so would have carried my giant white tote bag with red trim and worn a red pashmina and a short beige trench coat. Would all this red and blue stuff have been too matchy-matchy?
Another example is an outfit I wore to a wedding a few years ago, for which we were instructed to "dress fabulous". The bride has a very flamboyant style and wore hot pink platform heels with her dress, just to put things in context! My dress had a vivid aqua blue and yellow geometric print on a white background, and I wore a ruffly white cardigan (as it was freezing), bright yellow patent heels, and carried an aqua pleather croc print clutch bag. I also had an aqua feathery fascinator in my hair and aqua pashmina for later in the evening. Was that too much blue, matching the blue and yellow dress? I didn't really want to add another color given the bright print.
Both of these seem better than my default of wearing black with everything, although I suppose they aren't particularly imaginative. Certainly better than the dyed-to-match purple lace shoes I wore with my purple lace dress to junior prom...