Unstable usually refers to in development or bleeding edge software. For example the latest stable Linux kernel is 2.6.34 however kernel 2.6.35 is currently under development
http://www.kernel.org/
For example on my Linux Mint 9 installation although it ships with kernel 2.6.32 I have upgraded to kernel 2.6.35 using the Ubuntu Maverick repository after satisfying myself it is suitably stable
http://cdimage.ubuntu.com/releases/maverick/alpha-2/
Ubuntu 10.10 (Maverick Meerkat) is due to be released later this year
https://wiki.ubuntu.com/MaverickReleaseSchedule
Debian is a prime example and breaks down in to three categories (stable, testing and unstable)
http://www.debian.org/releases/
Fedora is considered to be a test bed for Red Hat as is OpenSUSE for SUSE Linux
http://fedoraproject.org/
http://www.redhat.com/
http://www.opensuse.org/en/
http://www.novell.com/linux/
To check what stage any Linux distro. has reached it is best to consult DISTROWATCH.COM
http://distrowatch.com/
The sidux distribution is a desktop-oriented operating system and live CD based on the unstable branch of Debian GNU/Linux. Besides full compatibility with its parent, the distribution also offers a custom kernel with support for a wide variety of modern hardware devices, KDE as the default desktop environment, a rolling release cycle, and compliance with Debian's Free Software guidelines.
http://distrowatch.com/table.php?distribution=sidux
LUg.