Survivorship bias occurs when only certain successful subsets of a group are visible, because the failures, for whatever reason, drop out of observation. Once this occurs, the visible subgroup will be mistaken for or thought of as the entire group. This will lead to false conclusions, because the non-survivors deserve consideration as part of the group. This can happen in many settings, from planes coming back from battle, to students from a high school going to college, to mutual fund performance.
Hedge funds will all truthfully promote themselves as increasing returns by some percentage. This may give the impression that investing in a hedge fund is essentially printing money. However, survivorship bias paints a different story. Say 20 people went into a casino for a night, and played a game with small house edge, like blackjack. At least a few of them would make money, and if the rest were forced to drop out of the market, it could appear that blackjack had consistently positive returns. While hedge fund management is not blackjack, it is best to be weary.