Lateral rotation, as it relates to ergonomics and body mechanics describes the movement of the body in relation to the medial plane (otherwise known as the midline).
The medial plane is the plane that bisects your body into left and right sides and makes you bi-symetrical. Lateral rotation describes a motion where you twist part of your body away from the medial plane and your neutral posture.
Lateral rotation is done with just a part of your body, such as your hips or torso. If you laterally rotated everything together that would include your medial plane and you would just be reorienting yourself, not laterally rotating a part of you.
Lateral rotation is opposed to medial rotation. If you held your elbow at 90 degrees and swung your forearm back and forth lateral rotation would describe the motion of your forearm going from your belly button to an open position out to the side. Medial rotation would describe the forarm coming from the outward position to your torso.