The only context where "illegal" was ever used to describe a person was "illegal immigrant" (or the older term, "illegal alien"). It was explicitly about immigration policy.
Democrats have been pushing back on the language of that, because "illegals" had plainly become a slur and tool for othering and dehumanizing. I think democrats focus on that horse-shit way too much—though, then again, shifting language that way as that kind of political tool is something Republicans do and had done in this case, so maybe I'm wrong and they're right for trying to stop it—but that's what the sign's about, it's a topic they've had a bug up their ass about for like twenty damn years.