Maximum drawdown measures the deepest decline in a fund's history: from the highest peak its unit price reached to the lowest trough that followed, before recovery. It is always negative or zero — a fund whose price has never fallen has a max drawdown of 0%.
Its value is that it translates risk into lived experience: 15% volatility is abstract, but "the fund lost 35% of its value in a crisis and took three years to recover" is a sentence you can honestly test yourself against: would I have held on without selling?
Mind the asymmetric math of recovery: a 50% fall requires a 100% rise to get back to the starting point, not 50%. This is why long-term investors care about the depth of drawdowns as much as average returns.
The number is historical by nature: it tells you the worst that happened over the measured period, and does not guarantee the future won't bring a deeper one.