Said of a computer system with excessive or annoying security barriers, usage limits, or access policies. The implication is that said policies are preventing hackers from getting interesting work done. The variant "fascistic" seems to have been preferred at MIT.
In the design of languages and other software tools, "the fascist alternative" is the most restrictive and structured way of capturing a particular function; the implication is that this may be desirable in order to simplify the implementation or provide tighter error checking. Compare bondage-and-discipline language, although that term is global rather than local.