Slashing is what gives proof-of-stake its teeth. Signing two conflicting blocks or otherwise attacking consensus is detectable by any node, and the protocol burns a portion of the offender's bond automatically.
Ordinary downtime is usually penalised much more mildly through missed rewards. The severe penalties are reserved for correlated failures, where many validators misbehave together, because that is what threatens the chain.
Example: a 32-coin validator slashed for double-signing might lose 1 coin immediately plus a correlation penalty that scales with how many others offended at the same time, potentially most of the bond. If you delegate, read who bears that loss: you, or the operator.
Related: validator, proof-of-stake, staking