Leverage makes a debt possible. If a market gaps through your stop and through your entire equity, the arithmetic leaves you owing the broker. Negative balance protection stops there: the balance is reset to zero and the shortfall is the firm's loss.
It is mandatory for retail clients under the EU, UK and Australian CFD rules and is offered voluntarily by many other brokers as a selling point. It is frequently absent at an offshore-broker, and it is commonly not available to professional-category clients, though some firms extend it anyway.
The protection applies at the account level after the event. It does not prevent the loss of everything in the account, and it does not apply to money you have deposited to meet a call during the move.
Example: equity is $2,000 when a currency gaps overnight. The close-out fills at a level that produces a $5,200 loss, leaving minus $3,200. With NBP the balance becomes $0; without it, the broker can pursue $3,200.
Related: stop-out-level, swiss-franc-unpeg, offshore-broker, weekend-gap