Muzzle Velocity confusion

It is the velocity with respect to the end of the gun barrel. However, it is probably an imprecise term because if you want it down to the mm/s you would have to subtract the recoil speed of the gun. In practice people just measure the velocity with respect to a closely spaced meter on the bench and assume the gun recoil is negligible, as well as the deceleration of the bullet once it has exited and during measurement.