Plain English Meaning
Becoming unable to fly the aircraft safely, either all at once or gradually, because something has gone wrong with your body or mind.
Full Definition
A pilot's loss of the physical or mental ability to safely operate the aircraft, whether sudden (such as a heart attack, stroke, or loss of consciousness) or subtle (such as impaired judgment from hypoxia, fatigue, medication, or illness).
Context Anchor
Seen in aeromedical and instrument flying discussions when describing conditions that can make a pilot unable to control the aircraft, make decisions, or communicate safely.
Derivation
From the Latin 'in-' (not) and 'capax' (able). Literally 'made unable.' In aviation it specifically means made unable to fly the aircraft safely.