A defect is any error in an application that disrupts the normal flow of operation. It is your job as a functional tester to locate and eliminate as many bugs as possible before they reach the customer.
Each defect has a life cycle that determines its current state. The interviewer wants you to explain this life cycle in detail; that way, they can assess your tester skill sets and overall approach to addressing bugs. Use examples from previous projects if you can.
Defect life cycle states :
New : Any recently located bugs are given a “new” status
Assigned : The new defect is assigned to a development team for correction
Open : Analysis and corrective actions begin
Fixed : All changes to the defect are completed
Pending Retest : The developer reassigns the defect back to the tester
Retest : the tester verifies the fixed defect
Verified Closed : With no additional flaws, the test cycle is verified and closed