[nso]

The terms first, second and third world were coined during the cold war, during which those countries did exist.

First world were countries allied with the US. Second world were countries allied with the USSR. Third world were neutral countries.

So Switzerland, Ireland, and Sweden are third world countries.

[gnl]

While the terms may have been originally coined during the Cold War, the meaning and common usage has clearly changed. If you use 'third world countries' in a conversation hardly anyone will assume that you're including Switzerland in that. When enough people use a word "wrong" for a long enough time, they kinda stop being wrong.