It occurs in traffic and often leads to a bad accident. One car is stopped. Another car coming in the opposite direction wants to turn left in front of the stopped car. The driver of the stopped car waves as if to say "it's OK to make the left turn in front of me". However, in the empty lane to the right of the stopped car, here comes another car whose driver has no idea that the left-turning car got the OK wave. The left-turning car and the car in the empty lane hit together usually pretty hard. Thus, the wave of death.
I was in an accident because some asshole gave another driver the wave of death.