from here: http://hyakumonogatari.com/2013/11/15/whats-the-difference-between-yurei-and-yokai/
[the Chinese loan-word] Yokai described an unseen world of mysterious, supernatural phenomena. The term represented something invisible, without form or identity; a mysterious energy that pervaded the deep forests, oceans, and mountains.
In truth, the word “yokai” was barely used at all. Ancient Japan had a more common name for this invisible, mysterious energy—mononoke. The idea of mononoke was something to fear—a mysterious, natural force that could come out any time and kill you, like a lightning strike or a tidal wave. It took the artists of the Heian period to give form to this mysterious energy, and transform the mononoke into bakemono, changing things. And then it took the writers of the Edo period to take these shapes and give them stories.
Japanese mythical creatures doesn't really fit the same categories as ones in Western mythology, so the appropriate English translation would vary from case to case. But monster, spirit or spectre would all be possibilities.
As to the modern meaning of the word; just going from what I've read in manga it's a much more uncommonly used term than oni, bakemono, youkai or a dozen different words for monsters of various stripes. As such, I would have expect that it has retained more of its original meaning than the newer terms, but you'd need a native speaker - and probably a folklore buff at that - to really answer your question.