Admit and acquiesce now, and live, or continue to fight your losing fight and die. Fold means quit now so you don't lose later. the stakes now are acceptable. later, they will be much higher.
Cut your losses while you still can. Save something rather than lose it all.
The problem is, of course, that it is rarely obvious that you are going to definitely lose everything if you keep fighting. That is why we do not fold, we believe that we still can win.
I have never actually heard anyone say "fold or die", but the meaning is obvious. You are going to lose no matter what, so lose now and come back some other time. No coming back if you stick around and then lose.
That person is declaring that you WILL lose. Why believe him?