The term haole

Can anyone confirm the true definition or meaning of haole? I’ve heard two different definitions from local friends:

It’s a nasty, disrespectful person we don’t want here. It has nothing to do with skin color and everything to do with attitude
It’s only about skin color. If someone calls you Harold and you are fair skinned, don’t be offended, it’s because you are white

The two contradict one another, and I’m curious about the consensus from locals. Is it contextual? Generational? A linguistic difference?