A 'drop-in replacement' is any part that is a direct replacement for the original part. It means something that does the same, or a better job as the original part, without any modifications to the larger thing.
It can certainly be used in a software sense, but that is only a subsection of the possible areas you could use it.
"You can buy circuit breakers that are drop-in replacements for your old ceramic fuses".
"You could get one of those drop-in replacement ignition systems to replace those old unreliable points on your old car".
"Replace that lamp with one of those drop-in replacement LED lamps. Then you won't have to keep replacing it".