(last updated: 12/28/17)
Any time you end your turn with less than 0% health, you will drop out of the fight unless some mechanic manages to bring you back above 0% health such as RESTORE, SECOND_WIND, SURVIVOR, DM/RECOVERY, etc.
The action you take before falling unconscious is called your Final Action. You can use attacks, interrupts, FOCUS, ASSIST, or PASS for your final action. You cannot take any other kind of action when you are below 0% health.
Your KO penalty will scale to how far below 0% you have been pushed. If you barely get nudged below 0%, your KO penalty will be around 10%. If you get hit far below 0%, your KO penalty may end up being significantly worse.
You can see the impact of the KO penalty in your 'check' output whenever you are below 0% health.
If you decide to interrupt instead of attack directly for your final action, your KO penalty will not penalize your interrupt chances.