Bulkhead is a simple idea borrowed from ships. On a ship, bulkheads divide the hull into separate sections, so if one section floods, the whole ship does not sink.
In software it works the same way.
We split the system into isolated parts. Each part gets its own thread pool or its own resource limits. When something goes wrong in one area, it can only burn through its own threads, not the whole system.
It is damage control. One section can fail, but the rest keeps running.