This page describes fallout, and some of its effects.
Fallout is the result of nuclear bombs going off. It is basically just radioactive particles that float around in the air. After nuclear blasts, these particles are thrust into the atmosphere, and take a long time to dissipate. In addition, these particles may spread from sector to sector. When a sector has fallout, during the update, things in that sector may die, melt, whatever from the radiation. The way it works is this: 1) All sectors that have fallout are checked, and things there are affected by the fallout. People die, commodities melt, etc. This includes anything on land units and on ships within that sector. 2) Next, fallout may spread from sector to sector, depending on the amount of fallout in the sector. Note that fallout will spread outward from ground zero, in all directions, at a maximum rate of 1 sector per update. 3) Lastly, fallout decays. Any fallout that is left decays. Decay usually happens in 1/2 life mode, which means 1/2 the given fallout in a sector (after spreading around) dies... Finally, if you are reading this info page, it probably means that you are trying to figure out what fallout is going to do to your country. Well, good luck, so are we. :)
See also : launch , nuke , Diplomacy , Damage , Combat , Nukes