Simply put, when a character is "Gimped", that character is wrongly equipped to face the task at hand. This has both to do with attributes and equipment. For example, if an elementalist shows up before a GvG and equips Air skills but has his attributes set to Fire, that elementalist is gimped.
Same goes with equipment, if you are supposed to have a special set of armor for a certain task at hand and forgets that armor set in your storage and have to complete the task with another armor set, you are a little gimped (if the choice of armor would affect the effectivness in completing the task). Wrong choice of weaponry can also cause your character to become gimped. Accidentally choosing a weapon with the wrong attribute and end up without causing any damage is very gimping, especially for characters supposed to cause physical damage such as Warrior, Assassin and Ranger.
This was a short explanation on what a "gimped" character is.