To bottom out a keyswitch means to fully depress it. Membrane rubber dome switches require the switch to be bottomed out to actuate, as this is the point when the membrane layers are pressed together. Quality switches typically actuate before they are fully depressed, and bottoming out becomes unnecessary, and is considered by some to slow down the typist: they may release a key once it actuates, but before it bottoms out.
With some switches, bottoming out brings the slider to a hard stop, jolting one's finger. Aftermarket soft-landing pads can be fitted to the keyboard to soften the impact of bottoming out. Alternatively, switches with a high final force (e.g. Cherry MX Clear) can reduce or prevent bottoming out.
While this would seem to be a comparatively modern term, it was used as far back as 1978, being found in the MEI Sabrecoil patent.