After the events of M-Day a large portion of the mutants population lost not only their mutant abilities, but they no longer had any trace of the mutant X-Gene. Due to the danger to the remaining mutant population, the X-Men extended an invitation of sanctuary at the school grounds. Former enemies, allies, and mutants that had never met the X-Men accepted and began to collect at the school.
The arrival of the O.N.E. Sentinel Squad did not comfort the already uncomfortable population at the mansion grounds. The Sentinels were ordered to stand guard not to allow any mutants to leave the grounds, explaining that it was for their own protection. After nearing the point of a riot, the O.N.E. decided to allow the mutants to leave the grounds as long as they agreed to the injection of a tracking chip. Several agreed, and were allowed to make a supervised trip to the town. When a situation developed between Mammomax and some of the locals, O.N.E. techs used the chip to deliver an electric shock, incapacitated him. The trip was called off and the confused and angry mutants were brought back to the Mansion.
The 198 is the group of around 25 mutants that sought refuge at Xavier's after M-Day. It was Erg who later applied the name to the still-powered refugees on the Xavier school grounds - 198 because he thought it sounded cool, and because it drew parallels to the Hell's Angels.
It is a misconception is that the 198 refers to all mutants retaining their powers after M-Day. 198 instead refers to the earliest confirmed number of mutants with active powers after M-Day. The actual number of remaining mutants is around 300.
(Though it is often reported that "90% of mutants" or sometimes "99%" were depowered, the actual percentage is far higher-- when Genosha's 16 million mutants were wiped out, this was described as "half the mutant population" on Earth. Of the remaining 16 million, all but roughly 300 are still mutants. Therefore 99.9998% were depowered.)
A list of all mutants who retained their mutant abilities after M-Day can be found here: 198.
Message to Comicvine Users
This page should only cover the group of 25 or so mutants that stayed at Xavier's after M-Day, not every mutant with powers after M-Day. Please do not add characters to the 198 that were not one of these refugees.