This condition is applied to an object, rather than a character. The object is sufficiently damaged that it is unusable for its intended purpose. The object provides no benefit to its user, and if used as a required part of an action, that action automatically fails.

Note that a Destroyed object is still physically present; it's just useless. In addition, a Destroyed item can no longer be repaired. It can be salvaged for raw materials, but can never be made usable again.