It amounts to too many goods chasing too few buyers. As a result, businesses will earn less because they can't charge as much for their goods. And faced with a choice between cutting prices and lowering output, some will choose the latter, which usually means people lose their jobs. Deflation is also bad news for people with debt because the money they pay back has more purchasing power than the money they borrowed. Disinflation, while benign, can spiral into deflation.
Companies focus on cost cutting and boosting productivity.
Wages are held in check or tied to profits. In extreme cases, companies shut down plants and lay off workers. Consumers husband their slower-growing income and reduce debt. Depending on confidence levels and job stability, they may begin to hold off purchases in expectation of even lower prices later. Subdued demand in turn forces prices even lower, squeezing profits further.