Sri Lanka is only the 51st "best country in the world" according to US News[1]. That's really not bad and not really 3rd world at this point.
People often use when they want to say "backwards" countries.
The correct term is developing world, which just means rapidly improving and doesn't cloudy the convo with connotations about the cold war.
The primary definition is now "underdeveloped countries" - because language changes over time.