"Bit-rot" is slang for data-corruption. The optical storage mediums used late last century such as CDs and DVDs would typically get slightly corrupted over time. This was specially true for burned DVD images.
Going through hundreds of burned CDs and DVDs made ca 1995 to 2010 sometime in 2017 revealed that some CDs would have read errors and a few would not work. DVDs were a lot more problematic, a majority of burned DVDs had simply become unreadable over time. The DVDs that did work had some corruption as a result of "bit-rot".
Files with lossy audio compression on ancient CDs sound horrible. This is not only due to bit-rot; a MP3 with a 128kbps bitrate made with the MP3 encoders that were common in the 1990s sounded horrible back then too. Some data corruption due to 20 years of storage on a burned CD will obviously not help MP3 files which were bad to begin with.
Playing rotten video flies
The mpv video player is by far the best alternative for playing partly corrupted video files. It handles them very gracefully. VLC will also play them but it will have a lot more visual artifacts. GStreamer based players like Parole are the worst choice for corrupted video files; players using the GStreamer framework will simply abort or crash if a video file isn't perfect.
Some young "developers" who couldn't write a hello world program in C if their life depended on it have suggested that unmaintained source code suffers "bit rot" because "nobody is maintaining it". That is a wrong and foolish use of the term "bit-rot". A source code repository on a RAID 1 array won't have bits flipped around because time goes by.