Graceful degradation is the ability to continue working, albeit with reduced functionality, when some expected capability is absent.
This is an example of an HTML link that degrades gracefully:
<a href=”http://solarsystem.jpl.nasa.gov/planets/profile.cfm?Object=Mercury” onclick=”…”>Mercury</a>
Design your web pages, your software, your machines, your whatever to degrade gracefully. Anticipate things that might be absent or turned off and make your system able to still function.