Puppymills are large commercial kennels who provide puppies for the retail pet industry/pet stores. They are required to be licensed by the USDA. Missouri has the largest number of puppymills in the country. This saleswoman is either lying or misinformed when she tells you that the puppy didn't come from a puppymill.
Here is more information on the USDA and puppy mills.
Puppymills - commercial dog kennels and the USDA