1. A sudden, usually drastic failure. Most often said of the system, especially of magnetic disk drives (the term originally described what happened when the air gap of a hard disk collapses). "Three lusers lost their files in last night's disk crash." A disk crash that involves the read/write heads dropping onto the surface of the disks and scraping off the oxide may also be referred to as a "head crash", whereas the term "system crash" usually, though not always, implies that the operating system or other software was at fault.
2. To fail suddenly. "Has the system just crashed?" "Something crashed the OS!" See down. Also used transitively to indicate the cause of the crash (usually a person or a program, or both). "Those idiots playing SPACEWAR crashed the system."