It is not really "rot", but it refers to a gradual deterioration of the disc. I was heavily into laserdiscs during their heyday, and lost quite a few to the dreaded rot. Luckily, Pioneer replaced a good many of them, and Ken Crane's (now DVD Planet) replaced a few for me.
It usually manifests itself as a lot of "sparklies" in the video, and sometimes you can hear them in the audio as noise. Once it starts, it only gets worse. Supposedly, it had something to do with contamination during the gluing process. Laserdiscs are really two sides glued together. Sometimes, you can feel some stickiness at the edge, though this will not necessarily lead to rot.
Columbia Tri-Star was notorious for leading the way with laser rot. One plant in particular had that problem. Aside from Lawrence of Arabia, I do not think I have any remaining Columbia Tri-Star releases in the collection. I even lost a few Criterions, too.
There is even talk of DVD rot. Apparently, certain dual-layer DVDs have been known to "go bad". It is probably due to something other than the condition that plagued certain laserdiscs, but the end is the same. I have lost two DVDs to something like rot. They would skip, and sieze and not play past certain points.