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Typically applied to online regularly-changed/updated video games. To "nerf" something means to reduce its 'power' or effectiveness within the game. Often times this is to solve some problem in the game (such as an 'overpowered' weapon/ability or super effective strategy), or to push the players in one direction or another (such as a new cosmetic/item/character). Nerfs affect the 'meta' or prevailing strategy/characters/items used to win the game. In this way nerfs also give control to the developer of how the players play the game. i.e. nerfing a commonly used item to discourage the community from playing with it. Some nerfs can be so drastic they change the very fundamentals of the game, and are often a contributing factor to the size of the playerbase, for good or bad. Outside of games, this would again mean to reduce the things 'power' or 'effectiveness'. The exact analogy that gave birth to this term, is that of a Nerf Gun, compared to a real gun.
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