A Knockout occurs when a character's Health reaches zero in a match. They are "knocked out" and permanently removed from the match. However, most team-wide passives, such as Harley Quinn/Arkham and Killer Frost/Prime's passives, will continue to take effect.
Characters who benefit from knocking out enemies include Doomsday/Regime, Doomsday/Prime, Deathstroke/Prime, Deathstroke/Insurgency, and The Joker Unhinged/Suicide Squad. Zod/Prime and Hawkgirl/Blackest Night are the only characters to benefit from any teammate being knocked out. The second part of Harley Quinn/Arkham Knight's passive triggers when any The Joker character is knocked out, giving her full power. The Joker/Insurgency, The Joker/Prime and The Joker/The Killing Joke's passives activate when they are knocked out.
Soultaker Sword allows the wielder to steal some damage from a knocked out opponent.
Some forms of damage cannot deal a knockout blow and will always leave the target with at least 1 health, including damage over time status effects, area effect, The Joker/Insurgency and The Joker/Prime's passives, League of Assassins Set's full set effect, and more. Fourth World Set's 2-piece set effect revives the user with a certain % of max health once per match, and the limits of dealing a knock out blow mostly applies to triggering the resurrection. Additionally, some special attacks may have hits than cannot knock out an opponent. For example, the The Arkham Knight: disregarding his passive, which deals additional damage when he hits 200% on his SP2, only the very last hit of both his specials can knock out characters. Both of The Joker Unhinged/Suicide Squad's specials also cannot knock out an opponent other than their last hit.