What does deathtouch mean in magic the gathering?

Deathtouch is a static ability, like trample or flying, that reads, "When this creature deals damage to another creature, destroy the creature that was dealt damage."

For example, if you have a 1/1 creature with deathtouch blocking an 8/8 creature, then your creature will deal 1 damage to the attacking creature, and vice versa. Your creature will die because it was dealt enough damage to kill it, but your opponent's creature will die as well. This ability also works when you are attacking or using an ability that deals damage to a creature, such as Pestilence Demon.