Discrete is the opposite of integrated, as in integrated circuit.

In practice, it means using multiple components. In a strict sense it means no integrated circuits at all, I suppose. But it's also a relative thing. So while a 7400 series chip is not a "discrete" component as most would think of it, using a hundred 7400 series chips to implement a processor is relatively more discrete than a microprocessor. (It's certainly not as integrated.)

Since the early 1980s, Ethernet interfaces have used used custom chips, because the amount of logic required would need dozens of gate-level chips otherwise (as seen here!)