It's one of the most derogatory terms that a sailor can use in referencing another and it has probably been around, in one form or another, ever since people took to the sea. Lubber's general meaning is well understood: a person who is awkward, unsure and most probably incapable of doing anything useful aboard ship. Ask any sailor what a lubber is and you'll probably get an answer relative to that sailor's duty that essentially translates as "a good-for-nothing who is in my way". Again, it's not nice to be called a lubber.
The etymology of the word is extremely uncertain but it did not derive from the term "land lover", as many people think. The word is most commonly said to come from the Scandinavian word "lob" which means a clown, dolt or drunkard. This is fitting, too, since there was never a better seaman (or pirate!) than a Viking.
A lubber's hole is the open space between the mast and the top (the top being what is referred to in whaling ships as the "crow's nest"). The space got it's name from the fact that true seamen would never climb onto the top via the hole, but swing out under the top and climb up over the outside. I am not making that up and it is - believe me - quite a feat to accomplish in even the calmest of seas. There's a reason men in the tops are often referred to as "monkeys".
Lubber-land is a seaman's Shangri La. Also known in the Royal Navy as Fiddler's Green, it is a place where no work is necessary and all the best of life is readily available.
Do not confuse a lubber with a landsman - although a landsman can certainly be a lubber. Landsman was a rated position in naval parlance (particularly the Royal Navy where conscription via impressment was common) and signified a person so raw and fresh from land that they were good only for work on the deck. Landsmen were not sent into the tops, or up to work the sheets. The lubbers would just fall and kill themselves anyway and then they're not even good for braiding rope. Tsk.
Finally, in an interesting twist that seems to be common to all languages, sailors would call one another lubber in friendship. If anyone else called a mate lubber it might be time to take a poke at him, but it was all in good fun to joke that a pal was a lubber. No hard feelings, mate.
Now that you've got your terms straight, I say get back to work you lubbers and I'll spy ye in the week ahead!