Plain English Meaning
The setting on the mixture control that turns off the fuel supply, so the engine runs out of fuel and stops. It is the normal way to shut down a piston aircraft engine.
Full Definition
A mixture control position that completely stops the flow of fuel to the engine cylinders, used to shut the engine down. Moving the mixture control to idle cutoff leans the fuel-air mixture to the point where no fuel is delivered, causing combustion to cease while the ignition is still on.
Context Anchor
You encounter this during engine shutdown, when the checklist tells you to move the mixture control to idle cutoff.
Derivation
Called 'idle cutoff' because the mixture control is moved to the position while the engine is at . 'Cutoff' simply means the fuel is cut off — stopped at its .