I'm not certain I fully understand it either. I have a real-world ethical concern related to colonialism and its supporting tropes. One of the more egregious has been the depersonalization and mass slaughter of peoples. Usually I find myself able to sustain separateness between such compunctions and play. That I don't in this case potentially relates to the concept of "bleed" as defined in Nordic LARP.
Bleed is experienced by a player when her thoughts and feelings are influenced by those of her character, or vice versa. With increasing bleed, the border between player and character becomes more and more transparent. It makes sense to think of the degree of bleed as a measure of how separated different levels of play (actual/inner/meta) are.
Bleed is instrumental for horror role-playing: It is often harder to scare the player through the character than the other way around. An overt secluded dice roll against a player's perception stat is likely to make the character more catious.
A classic example of bleed is when a player's affection for another player carries over into the game or influences her character's perception of the other's character.
...games rely on bleed either to influence player's actions or to achieve higher purposes in the premise. For example, Fat man down uses bleed to encourage the players to reflect over society's treatment of fat people. Playing Doubt close to home regularly causes bleed as a consequence of using own experiences in the game and re-living relationship situations or reflecting on relationships. Sometimes, the entire purpose of a game is to create bleed.
The purpose of the 4e minions mechanic in the designers' own words is that "The players get to enjoy carving through the mob like a knife through butter, feeling confident and powerful." For me that produces "bleed" somehow connected with my real-world ethical position: I find myself paying a price that I don't wish to pay to sustain the lusory attitude of separateness.
It seems possible that my morally-motivated preference has revealed something that can be seen in TTRPG and not in traditional authored linear narrative. Roughly that through bleed a player can feel compunction about what they will pretend to do; and this arises on account of their being author, actor and audience. So here it is not the worry that the fiction will have real-world moral consequences, but that one doesn't want to imagine and pretend to do some sort of thing one finds immoral in real-life. As other posters have stressed, morality stays firmly located in the real-world.
The above might not be right in every detail, but it seems directionally accurate to me based on the conversation thus far.