Dead Paint is a term of art used to describe paint which has become oxidized. This is caused by interaction with the air and ground level ozone. Water and UV radiation can also play a part in this process.
There are other things that can cause dead paint, such as strong chemicals, acid rain, which might burn your paintwork, but in general it's caused by oxidation. Thankfully, because it is just on the surface of your paintwork where it contacts the environment, it generally doesn't run deep, meaning it can be polished off fairly easily.