The negative connotation of the word "madrassa" as it's come to be understood in the English-speaking world--as referring to a place where fundamentalist, Islamic instruction is combined with anti-western vocations, or in the extreme, as a place where terrorists are formed ideologically--is largely an American and British conceit. It is for the most part, but not entirely, inaccurate.
Unquestionably, there has been a rise in the number of religious schools in the Islamic world, and particularly of schools dominated by the more fundamentalist Deobandi, Wahhabi, and Salafi strains of Islam. Pakistan reported that between Independence in 1947 and 2001, the number of religiously based madrassas increased from 245 to 6,870.
The schools are often funded by Saudi Arabia. A few schools have produced militants, especially in Pakistan, where the government in the 1980s actively supported the formation of Islamic militias to fight in Kashmir and Afghanistan.
Overwhelmingly, however, madrassas are apolitical and provide instruction and boarding to the poorer segments of society--segments generally neglected by the state.