The word actually refers to a prominent part of the male anatomy (every man has a pair of them - I can't be more explicit because of the site rules!) In Spanish it means exactly that, but it also has a secondary meaning of courage, in particular what is even now often thought of as 'manly' courage.

Ernest Hemingway made this word popular among English speakers. It summed up the kind of courage he admired; being actively brave, not giving in or letting yourself be intimidated, standing up for what you believe in etc. On a more simple level, he was also worried about being impotent and generally not macho enough, which may have been why he felt the need to talk about it so much.

Nowadays the word is often used, sometimes jokingly, about both men and women, to imply that kind of open, 'not giving in' courage. In UK English there is a slang phrase 'Grow a pair!' which is often directed at someone you think is being weak.