Apparently, a muggle is a person "without a particular skill."
Eleanor Maier, Senior Editor at the Oxford English Dictionary, has sent BuzzFeed a comment informing us that the word 'muggle' first entered the dictionary in 2003, six years after the publication of the first Harry Potter book. She notes: "Rowling has explained that she invented the word by softening 'mug' , meaning a foolish or gullible person, with the diminutive suffix '-le'."
She says that the OED has found a number of different senses of the word 'muggle'. Including the following:
1. "The earliest entry is a rare word meaning 'a tail resembling that of a fish', this sense is illustrated by one quotation from c1275."
2. "The next significant appearance of the word in English is in the early 17th century. The OED isn't sure of the exact meaning, but thinks that it probably means 'a young woman, a sweetheart' and may be connected to 'moglie', the Italian word for wife."
3. "Finally, there is a slang use of 'muggle' with the sense 'marijuana, a joint'. The origin of the word is unknown, but it is first recorded in 1926 in the expression 'muggle-head', and is later picked up by Raymond Chandler who describes one of his characters as a 'muggle-smoker'."