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Traditionally found in cooperative first person shooters, this phenomena comes into play when one of the players dies.
Using Halo: Combat Evolved as an example, in singleplayer mode, when the player dies, the game reloads the last checkpoint and they have to try again. But in co-op mode, if one player is killed, they merely spectate while the other player continues the fight. If the other player is also killed, the game will reload a checkpoint, just as in singleplayer mode, but if the other player can either kill all the enemies in the area, or retreat to a safe area without enemies in it, the deceased player will respawn next to their partner.
This has lead to the creation of co-op only tactics such as "the coward method", also known as the "one-man army". When the players are confronted by a particularly large group of enemies, one player hunkers down in a safe area while the other runs into the thick of the enemy and kills as many of them as possible before they bring him down. Then, when he respawns, he goes and does it again, and again, and again, until the enemy group is small enough that the players feel confident in handling it in the normal way.
In Halo 2, one of the ways the developers attempted to make the Legendary difficulty setting even harder was by removing this mechanic; when Halo 2 co-op is played on Legendary, if either player dies, the game reloads a checkpoint. This was amazingly unpopular with the fanbase, however, and the feature was returned to Legendary mode by Halo 3.