Each time you use either an Unlimited or Limited item, the item decays - that is, its Trade Terminal value decreases. Each such item can be used until its value drops to its Condition Limit. The Condition Limit is displayed as a percentage of its maximum Trade Terminal value in the Item Info Panel.
A Limited Item can be identified by the (L) at the end of its name, as in the picture here.
Unlike Unlimited Items, a Limited Item's effectiveness does not decrease as it decays. For example, as Limited armour decays, it continues to provide 100% of its stated protection.
However, you cannot repair a Limited Item. Once it has reached its Condition Limit, it is now broken. Any remaining value below the Condition Limit can be salvaged by "TTing" the item (selling it to the Trade Terminal).