I believe that is what the term means. A (usually distinctive) dialect of a dense population in a city. An example would be, of course, a "New York accent". But just like other dialects, boundaries and sizes are not clear.
I think the term "urban dialect" sometimes refers to minority ethnic/racial, or just the general/non-upper class, populations specifically, but it shouldn't be limited to that meaning. Whatever is a distinctive description of how people speak in a particular urban area.
Of course the best source for this would be to look at current research (or textbooks) that use the term and give examples. It would be very easy to find dozens of examples on Google Books just by searching the term, for example.