RORY: Well, this is a town that likes the celebrating. Last year we had a month long carnival when we finally got off the septic tank system.
DEAN: A month long? You’re kidding.
RORY: No. There were rides and a petting zoo and balloon animals and a freak show.
DEAN: Uh huh. Okay, you almost had me going there for a second.
RORY: Well, we did have a ribbon cutting ceremony.
A septic tank system is one where domestic sewage flows into for basic treatment. The “fecal sludge” (poo) does not break down fast enough, and will periodically need to be taken away in a truck. It’s an onsite sewage facility used in areas not connected to a sewerage system, especially rural areas, such as on farms.
From Rory’s comment we learn that Stars Hollow got off the septic tank system in early-ish 2000 to be connected to the main sewerage system. For some reason, that was retconned in the revival so that the town was still on the septic tank system.