It depends. Sometimes I'll sell something perfectly working and mark it as "as is" meaning that hey if it breaks the day after you get it, it's your problem, not mine. (for instance, most used cars are sold "as-is")
If you're talking about "AS-IS Untested such-and-such bargain just $5" items on ebay, that USUALLY means the guy made a half assed attempt at seeing if something worked, and it didn't appear to work immediately, so he figured it was junk and would be easy to unload on ebay. That isn't ALWAYS the case, and sometimes you can get some great deals on that kind of stuff, but I think probably more likely than not the stuff is trash, or only good for spare parts etc