Downtime is the part of the game where you aren't interacting with either the game or the other players of the game (as players of the game, chit chatting with them doesn't count).
Generally, downtime is viewed as a bad thing. For me, I like my time spent playing games to be spent actually playing the game. Not waiting around for my next opportunity to play the game.
Now, downtime doesn't exist in every game. As an example, there are real time games where everyone is playing at the same time throughout the entire game. No downtime there.
However, most games will have downtime. So a big question becomes, what does the game give you to do during downtime? Are you just twiddling your thumbs? Or does the game provide a reason to remain engaged?