The term was used in contrast to the boilerplate nickname, which refers to a non-functional mock-up used to test spacecraft.
A battleship is functional, but simpler, cheaper and heavier than the operational version. Thus, it functions but does not achieve the same performance (such as thrust-to-weight ratio) as the operational one. In particular, propellant tanks and major structural components were made of thicker, more rugged materials rather than being carefully thinned to save as much weight as possible. This is done mainly to test the liquid engines operationally and the configuration of the propellant tank passively.