Short definition
The air space between the wine surface and the cork inside a bottle, which increases as wine slowly evaporates through the cork over years.
In a young bottle, the wine fills nearly to the cork. Over decades, tiny amounts of wine evaporate through the cork, lowering the fill level. A bottle from the 1980s with wine to the base of the neck is in good shape. If the wine is mid-shoulder or lower, it has had significant air exposure and is likely oxidized. Auction catalogs always note ullage levels for this reason.