To be deadly simply means that you choose to become a player-killer (aka pkill). Choosing to be a deadly will allow you to attack other deadly players and be attacked by them. Deadly characters appear in a separate section of the who list. Alternatively, you can type 'who deadly' to see all deadly characters currently online.
Being deadly opens you up to attacks from anyone at anytime, whether it is while you are attacking a mob or helping a clan member. To avoid repeated deaths at the hands of other players, it is a good idea to seek the protection of a deadly clan. Clans offer a base of operations and friends to protect you from getting attacked. However, clans may make their own rules about pkilling, so you should be careful about which clan you join.
Deadlies are allowed to multiplay; the only enforced rule is the pkill level limit.