The Jargon File (version 4.4.7, 29 Dec 2003):

drop-outs
 n.

    1. A variety of power glitch (see glitch); momentary 0 voltage on the
    electrical mains.

    2. Missing characters in typed input due to software malfunction or system
    saturation (one cause of such behavior under Unix when a bad connection to
    a modem swamps the processor with spurious character interrupts; see 
    screaming tty).

    3. Mental glitches; used as a way of describing those occasions when the
    mind just seems to shut down for a couple of beats. See glitch, fried.

    [73-05-20]

    A really serious case of drop-outs.


The Free On-line Dictionary of Computing (30 December 2018):

drop-outs

   1. A variety of "power glitch" (see glitch); momentary zero
   voltage on the electrical mains.

   2. Missing characters in typed input due to software
   malfunction or system overload (one cause of such behaviour
   under Unix when a bad connection to a modem swamps the
   processor with spurious character interrupts; see screaming
   tty).

   3. Mental glitches; used as a way of describing those
   occasions when the mind just seems to shut down for a couple
   of beats.  See glitch, fried.

   [Jargon File]

   (2001-02-22)