What happens when bike suspension bottoms out?

Answer 1

Bottoming out means that the suspension has compressed as far as it can, and usually it doesn't mean that much. Suspension parts frequently have a rubber block that the mechanics fetch up against at full compression.

But it will mean a harder landing that may either damage the bike or the rider.

Answer 2

Depends on how hard you hit it.

It's never good to bottom out suspension. If it happens regularly, you're riding harder than the bike is intended. A real hard hit can damage the suspension.