This expression is often used to characterise the normal EU way of decision-making, which is very different from the normal way of making international, intergovernmental decisions.
The "community method" is based on decisions regarding supranational policy made by agreement between member state governments, which need not always be unanimous. Individual states may therefore be forced to adopt a decision which they voted against.
This supra-national lawmaking is based on an initiative from the EU Commission and a qualified majority vote by the Council. The traditional form of international co-operation normally requires unanimity among participating states. Member states thereby surrender their traditional national sovereignty in the EU context.
In EU circles this is sometimes referred to as "pooling sovereignty".