When the food is coming, he/she only needs to open his/her mouth; when the clothes is here, he/she only needs to stretch his/her arms.
Yes, it's used to describe someone who is extremely lazy and often kids spoiled by their parents.
You can also use it this way "等我有钱了,我要过 饭来张口衣来伸手 的日子". This sentence means "when i'm rich, I'm going to have other people serve me in every possible way, and I'll just enjoy the service".