Worst-case scenario: the UEd Goblin wipes the map and burns down your house.
Telefrag is when one player/bot standing on a PlayerStart and a bot/player is spawned at that PlayerStart.
Note that this can only happen when multiple players are being spawned at once. In-game the engine takes extreme care to make sure a player/bot will never spawn on a PlayerStart that has another player/bot on it unless there are no unoccupied PlayerStarts in the map.
The word "Telefrag" is also used to refer to shooting the Translocator puck at someone and transporting in when it is right on top of the other player, killing them.
The engine calls this "encroachment":
event bool EncroachingOn( actor Other ); event EncroachedBy( actor Other );
Default behavior for Pawn's EncroachedBy function is to be "gibbed" by the other Actor.
See PlayerStart for information on how to design maps which do not have this problem.