Ammo is a shorthand way to say "ammunition," meaning bullets, gunpowder, and other combat supplies. A war movie might include a scene of soldiers running low on ammo.
Ammo generally refers to a supply of the actual munitions, or exploding substances and projectiles that are put in guns, cannons, and other weapons. A gun without ammo won't actually shoot. This colloquial form of ammunition was first used around 1917, and both are rooted in the Middle French phrase la munition, "fortification" or "defense."