It's no longer used by any Japanese people under 90 years old. It's the type of word a military officer would have used in WWII (when very angry). However, it still makes frequent appearances in anime and manga.
The translation is a little disappointing — it means you.
Why is you a insult?The word you is pretty common in English. So why is it an insult in Japanese?
There are many words for you in Japanese. The most common is (貴方 anata). They can all sound insulting if used improperly (although kisama sounds particularly insulting).
In Japanese, it's polite to address everyone by name in most situations. It's also necessary to use a polite suffix (usually san).
By using the word you — you're possibly indicating that you don't respect the person enough to use their name. However, it all depends on the context. Sometimes you is a perfectly acceptable word.
Japanese is complex.
So how do I avoid insulting people?There are 3 rules of thumb to avoid insulting someone with the word you:
1. Never use kisama — you'll sound like a 90 year old general from the Japanese army.
2. Drop personal pronouns. Japanese rarely use personal pronouns (I, you, we etc..). If the pronoun can be understood from context it's dropped. This is the number one mistake new Japanese speakers tend to make (if their native language is English). Watashi, watashi, watashi (I,I,I) ....
3. If you know someone's name — always use it in place of you. Always attach -san.
People will forgive you if your Japanese isn't perfect — but if you're always saying anata incorrectly it will be harder to make friends.
So how do I insult people?Some people might be tempted to try out anata as an insult. It's not recommended.
Unless you're a yakuza or something — Japanese people don't use anata as an insult much.
As a gaijin it's not easy to pull off. People will just think it's your Japanese. Even if your Japanese is perfect — they'll like just think you made a mistake.
In Japanese — even swearing isn't easy.