Why the text is meaningless on purpose
Placeholder text exists so that nobody reads it. Put real sentences into a layout you are still designing and the review turns into a discussion of the copy: someone questions a claim, someone else fixes a typo, and nobody looks at the line length or the spacing. Latin-looking words that mean nothing keep attention on the shape of the page.
Repeating one word, or filling the block with text text text, does not work either. Real prose has words of varying length and a rhythm of short and long ones, and that rhythm is what makes a paragraph look right or wrong at a given measure.
Match the amount to the copy that is coming
The most common mistake is generating a comfortable amount rather than the amount the finished page will carry. A card designed around forty words of filler breaks when the writer delivers ninety.
Ask for the real length before you fill anything, and if nobody knows yet, design for the worst case: the longest headline, the longest product name, the fullest paragraph. Generate by words rather than paragraphs when you are testing a fixed-height component — it is the only unit that maps directly onto a limit.
Translation changes the length again. English running into German typically grows by around a third, and into Spanish, French or Portuguese by a fifth or so; Chinese, Japanese and Korean usually come out shorter but occupy taller lines. If the interface will be translated, leave room in both directions.
When not to use it
Never in usability testing. People asked to complete a task on a screen full of Latin cannot judge whether the labels make sense, and the results tell you nothing about the real product.
Never for fields that hold structured values. Names, addresses, prices and dates have length distributions of their own, and lorem ipsum will not reveal the row that breaks when someone has a four-part surname or a five-digit price.
And check before you ship. Placeholder text reaching production is a well-worn embarrassment, and the paragraphs are easy to search for precisely because the opening words never change.
Plain text or HTML
Take plain text when you are pasting into a design tool, a slide or a mockup. Take the HTML output when you are filling a template and want each paragraph already wrapped in its own tag, so the spacing rules of the stylesheet apply the way they will in production.
Where the words come from
The passage is scrambled Latin from a treatise on ethics that Cicero wrote in 45 BC. A printer in the sixteenth century jumbled a section of it to make a type specimen, and the same scrambled text was still being sold as sheets of rub-down lettering in the 1960s and shipped with desktop publishing software in the 1980s. That is how a corrupted line of classical philosophy became the default filler of the design world.