I always pictured something like this:
In England, it means something like this:
This can make things pretty confusing. Actual conversation:
Ross: She's Asian.
Meg: British Asian or American Asian?
Ross says that he would refer to someone who is American Asian as Oriental- which would sound pretty outdated and possibly racist to Americans. Apparently, the term Asian keeps people who are from other countries (notably Pakistan) from mistakenly being referred to as Indian.
Or if you are a Royal, you can simply refer to this ethnicity as "slitty eyed". Yuck! I guess when you don't introduce enough new genes into the pool...