What is Entropy in a magical sense?

In physics, entropy is a measure of the disorder of a system. Thermodynamics says (roughly) that entropy is always increasing in large enough systems; i.e. things are getting more disordered. So your intuition that entropic magic is chaotic energy is right; that's why the word was originally chosen :)

That said, my guess is that it doesn't have any standard meaning across RPGs. It sounds like neat synonym for "chaotic" and really nothing more; so you would expect entropic magic to be able to do pretty much anything that chaotic magic can do. General harm and death and destruction stuff.

Depending on how closely a particular worldbuilder wanted the analogy to run, entropic magic could be particularly effective at dispelling other magics. This would make some "physics" sense in that ordinary magic could be interpreted as providing order to the local universe, and so entropic magic would be good at removing that order.