You are wasted in GTA (or You're brown bread! in GTA London) when all your health has gone. While playing GTA, you'll encounter numerous dangerous situations, like people shooting at you or jumping out of a burning car. When this causes your health to be completely drained, you will pass out and have to go to the hospital.
You'll respawn in front of the hospital. The medical staff will have taken your weapons and every mission you were doing will be failed. Since GTA III, you'll have to pay a small fee for the medical care you received, unless you are already broke. Being wasted in the classic GTA's will cost you one of your lives. When you loose all your lifes, you'll die, and the level will be failed.