Plain English Meaning
When a cockpit instrument stops working or starts giving wrong readings, so the pilot can't trust what it shows.
Full Definition
A condition in which one or more flight or engine instruments stop providing accurate information, either by ceasing to function entirely or by displaying erroneous indications. Failures may be caused by loss of power, blocked sensing ports, gyro spin-down, electrical or vacuum system problems, or internal mechanical faults. In instrument flight, a failure can be partial (one instrument affected) or total (a whole system, such as the pitot-static or vacuum system, lost), and recognizing the failure quickly is essential to maintaining control by reference to remaining reliable instruments.