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Multiplayer screenshot from 007: Agent Under Fire.
Frag is a video game term that means "kill". It's generally used in multiplayer deathmatches or similar scenario. It's derived from the military term that means the same thing.
Depending on the parameters of the match, players may also respawn after having been killed or eliminated to continue the match. Frag is also a term in shooting games where Frag is short for fragmental grenade normally, but has grown to mean all thrown explosive weapons. Players often warn teamates about thrown explosives by saying "frag out".