To diminish the power or effectiveness of...
To make less potent.
Originally, this was a product line of foam based toys for children. It was adopted by the online gaming community to refer to the reduction in power of a game feature for the sake of balance.
This term is now seeing more widespread generic usage, usually in reference to mechanical devices, or personal powers within a business framework.
antonyms: Buff(v), Spike(v)
My dad totally nerfed my access to the internet. Life suxx0rz since the advent of the NetNanny!
Did you hear that Henley got Nerfed?? It's probably because he handled the Parker account so poorly.
When a weapon in a game relating to call of duty is "taken down a notch". This means that it is no longer as good as it was, and is now no longer overpowered.
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.
Oh man, they totally nerfed 'Titans Armor'! Guess I'll stop playing Golem now :/
They nerfed Irelia again?? Oh wait, its actually a buff. <-- (opposite of nerf)
Great, so now all the free-2-play guns are nerfed, guess I have to buy some to keep competitive. :(