The act of doing something so awful you must never show your face again and God cries in pity for your soul.
The term can be expressed (written) two ways:
fail & Fail
The lowercase form expresses a smaller fail that no one will remember for longer than a week. Consider yourself lucky if you are simply charged with a "fail" crime.
The uppercase form of the word means that you have disgraced the human race and shall never be given respect again in your life, nor after that when you have gone to Hell either.
To fail is to be either:
Exceptionally bad at something, or to do/say something stupid to people,
Or for an item/thing to fail, it has to not be what it is, such as a funny comic not being funny, etc.
arpgme's comic FAILS
(Therefore meaning that it could be bad or poor at what it is intended to do)
You sir, FAIL.
(The person has just done/written something stupid or supposedly funny which achieves nothing it's supposed to.)