During WW II families hung a Maroon banner with a Gold Star on it for each family member in service. Now I guess that it has morphed into meaning a death in combat.
One blue star for each member in service. Gold star is for those who died in service. For the Gold Star lapel pin, things changed slightly after 1958:
(a) A lapel button, to be known as the gold star lapel button, shall be designed, as approved by the Secretary of Defense, to identify widows, parents, and next of kin of members of the armed forces— (1) who lost their lives during World War I, World War II, or during any subsequent period of armed hostilities in which the United States was engaged before July 1, 1958; (2) who lost or lose their lives after June 30, 1958— (A) while engaged in an action against an enemy of the United States; (B) while engaged in military operations involving conflict with an opposing foreign force; or (C) while serving with friendly foreign forces engaged in an armed conflict in which the United States is not a belligerent party against an opposing armed force; or (3) who lost or lose their lives after March 28, 1973, as a result of— (A) an international terrorist attack against the United States or a foreign nation friendly to the United States, recognized as such an attack by the Secretary of Defense; or (B) military operations while serving outside the United States (including the commonwealths, territories, and possessions of the United States) as part of a peacekeeping force.
More info: http://www.goldstarmoms.com/Members/GoldStarPin.htm