A brutal, unforgiving world. Lots of mean SoB's with guns, super muties, and worse. And yet, you cant exactly let the character die, but want it to be something a player would want to avoid.
Also, it was hinted that it would be loud and or graphic in a sense that you wouldn't want a nosy neighbor listening in and calling the cops.

So methinks I have a bit of it figured out to some degree. When your player gets defeated, they get their ass kicked. Yes, they just had their ass kicked. But what happens NOW is that the group of raiders you were fighting circle around you and take turns kicking the shit out of you, cutting your character, pouring whiskey into his or her wounds, and generally having a great time until your avatar passes out, left for dead, to wake up either in the middle of BFE or hopefully in the care of someone willing to give a damn in the wasteland.

Seems a bit ambitious, but it would be new and certainly give players incentive not to get "Defeated". And obviously the "Defeat" is context sensitive in terms of enemies.

You get mauled by bears, captured by super mutants or slavers, or evicted by security bots. Ie, each enemy type has a way of defeating you, without necessarily killing you.
Though of course getting your arse handed to you time and again will have negative effects. For one, I would imagine, it would effect dialouge. From "Howdy stranger" to "Man, who did you piss off!?!" to "Who kicked your ass this time? Hahahahahah" as well as being crippled or something to that degree, requiring you to heal it up or sleep it off.

Anyone else care to take a stab at it?

the idea of a varying context appeals to me as does the good samaritan twist , it would add more roles to the game not just nasty mofo or nice sob . you could track a bunch of raiders wait for them to pounce on some poor sap ,when they leave either rescue them or finish them off for their boots . but i think death should mean death when dealing with certain foes like a deathclaw ,id imagine youd need more than a few nuka colas and stimpaks to re-attach your limbs after picking a fight with one of them . same goes for mines /booby traps maybe a designated medic in a group of players for hardcoe mode. we can only hope that the clever little hamsters who make it work can find the time and a way to make v13 the ultimate mmo , im gonna send them a nice new wheel EAGLES MAY FLY HIGH, BUT WEASLES DONT GET svckED INTO JET ENGINES