At one time the definition of "lugging" an engine was a situation where the vehicle will not gain speed even under heavy throttle because of an unwarranted load placed on it, usually caused by too much weight for the gear it's in.
It is surprising that one can get the engine to "lug" when it is attached to an automatic transmission. You'd think the tranny would not allow this by going to lower gears.
I can see why a manufacturer would not want any lugging, especially in today's world that has particulate filters. I'm sure lugging would not be conducive to keeping particulate production low.