The KO'd party bug is a bug in Final Fantasy VI that causes the player to be in control of a party where all members are KO'd. The player can control the party in the field normally, but the moment they get into battle, the game registers that the party is KO'd and it is a Game Over.
The first opportunity to trigger this bug is during Sabin's scenario. When Sabin, Cyan and Shadow arrive at Baren Falls, if Sabin and Cyan are KO'd when they approach the edge of the falls, Shadow will leave the party and the bug will be triggered.
Later in the World of Ruin, the bug can be triggered at Dragon's Neck Coliseum. Any party members KO'd in battle in the Coliseum will remain KO'd, allowing the player to purposefully get the party killed and trigger the bug.
At most other points of the game, there are safeguards in place to prevent this bug from occurring, indicating the developers were aware of its potential. Shadow will never leave the party at the end of a battle if he is the only living character, and Gau cannot use Leap on the Veldt if he is the only living character. On the Floating Continent, if Shadow leaves the party when they attempt to return to the airship, or when approaching the pinnacle of the island, any KO'd party members will be restored to 1 HP.
On most other occasions where the player's party is changed or someone leaves the party, the party will be fully healed afterward. This includes when Shadow leaves on returning to Narshe and when Celes leaves in the Magitek Research Facility. This same kind of failsafe was attempted at Baren Falls, as Sabin and Cyan will be fully healed when they leap down the falls, but until then they are KO'd and the player can exit to the world map and get into a battle with them in such a state.