In basketball, this term refers to the area on the court behind the three-point line. It is an offensively minded term, and it is used when a player on the offense shoots the ball from behind the three-point line. It can be anywhere from behind the line, but is especially applicable the further away from the line the player shoots. The most accurate definition would involve a shot taken from the opposite end of the court.
The term "downtown" comes from how far away the player is from the basket, and it is often used by commentators and sportscasters when speaking about a particular shot taken from far away. A shot from downtown can either be made or missed, and shots made from downtown are often impressive and sometimes the result of luck. In the modern NBA, players have been known to practice shots from mid-court to ensure they have a chance to make it when the time comes, typically at the end of a quarter.