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Modulated continuous wave is defined by the Federal Communications Commission in 47 CFR §97.3(c)(4) as "Tone-modulated international Morse code telegraphy emissions having designators with A, C, D, F, G, H or R as the first symbol; 2 as the second symbol; A or B as the third symbol."
Simply put, MCW uses a fixed audio tone to modulate a carrier wave. This is an older method of sending Morse code, with continuous wave being the more common method used today. MCW is not allowed in the United States on amateur radio frequencies lower than 50 MHz, as it is a very inefficient use of radio spectrum.
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