What does this mean?

Defeat On means that the tone controls (bass and treble) will be bypassed. This is a more "pure" signal path as less processing is done. Defeat Off means that the tone controls are active. There were early reports of problems with the tone control processing but the latest firmware seems to have fixed that.

--Chuck

Cvinfig nailed it. When defeat is "on" the 990 disregards the bass and treble tone controls shown in the System Config menu.