Shock fade is when the shocks virtually stop working, that is, does not provide any resistance and control to movement. It is not caused by them wearing out over time, it specifically refers to them failing under certain conditions regardless of age and mileage.
If a shock absorber is subject to 'extreme' use for a prolonged period of time they can start to get very hot. During shock fade the oil inside gets so hot that it actually boils and mixes with the gas. The oil now has much, much lower viscosity and can not perform normally resulting int the ride feeling as if there are no shocks there at all. The shock must cool down sufficiently for the oil and gas to separate before it will function correctly again.