In a core banking system, what does “multi-bank capability” mean?

It is different from multi-entity (i.e. the ability to run multiple banks in the same software, haven't seen that happen yet).

Multi-bank capability is to have various banking functions in a single software. Investment Banking, Retail banking, Corporate banking, Branchless/Mobile Banking, Microfinance Banking, etc.

Depending on the vendor, it basically flaunts the multiple banking divisions in a singular platform.